Offsetting is an action by a company or individual to compensate for their emissions by financing a reduction in emissions elsewhere. Offsetting and carbon markets are a fundamental component of global, regional and national emissions reduction policies. They have operated for decades for compliance purposes and voluntary emissions reductions and continue to be an effective mechanism to underpin action against climate change.
There are many ways to achieve CO2 reductions that can be used as offsets, many of which bring other social, environmental or economic benefits relevant to sustainable development. Such offsets can be sourced from various types of project activities, including, for example, wind energy, clean cook stove, methane capture and other emissions-reducing or avoidance projects.
To ensure the environmental integrity of CORSIA, ICAO will adopt a list of emissions units that can be used for compliance. The decision will be guided by eligibility criteria to guarantee that emissions units deliver the desired CO2 reductions. The criteria are based on principles commonly applied under existing trading mechanisms and well-accepted carbon offset certification standards.
See also IATA's position on the avoidance of double counting under CORSIA (pdf).
Environmental impact of CORSIA
CORSIA is a global scheme. As a result, CORSIA will overall result in a greater CO2 mitigation in international aviation than any domestic policy for aviation can achieve. It is forecast that CORSIA will mitigate around 2.5 billion tonnes of CO2 between 2021 and 2035, which is an annual average of 164 million tonnes of CO2. This represents an investment of about USD40 billion in climate projects (assuming that the price of carbon will increase from USD8 in 2021 to USD20 in 2035).
A multilateral approach
On 27 June 2018, ICAO adopted the international Standards and Recommended Practices (SARPs) for CORSIA as Annex 16, volume IV, to the Chicago Convention (link). The adoption of global standards for CORSIA will ensure the necessary level of uniformity in regulations which our industry needs. Uniformity is not only key to prevent market distortions, but also to preserve the environmental integrity of CORSIA.
Whilst emissions from domestic aviation are subject to country-specific actions and therefore fall under the scope of the UN Framework Convention on Climate Change and the Paris Agreement, ICAO was mandated to address emissions from international flights.
International cooperation, including in addressing environmental impacts, is critical for a sector like aviation. This is why, in the Chicago Convention on International Civil Aviation, states committed to collaborate in securing the highest practicable degree of uniformity in regulations and bring their domestic regulations in line with the international standards adopted by ICAO in Annexes to the Chicago Convention.
Avoiding the patchwork
In order to avoid a patchwork of uncoordinated regional and domestic policies for international aviation, political agreement for CORSIA was achieved on the condition that CORSIA would be the only market-based measure applied to international flights and on the basis that emissions should not be accounted for more than once.
Unfortunately, the success of CORSIA may be jeopardized by the national policies of some states. Of particular concern is that some states are applying or considering the application of a carbon pricing instrument or ticket tax to address emissions from international aviation, on top of CORSIA. Such policies are not only against the international commitments of these states, they also undermine multilateral efforts to deal with climate change and put at stake the credibility of the global approach, potentially compromising the international support for CORSIA at a critical time for its implementation.
See our factsheet on CORSIA and carbon pricing (pdf).