CORSIA’s carbon market risks undermining itself

The global aviation industry's flagship carbon offsetting programme is quietly collapsing under its own contradictions. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) — designed to cap aviation emissions growth at 2020 levels through mandatory carbon credit purchases — is enabling a parallel system where host countries approve credits that may lack real environmental impact.

At the heart of the problem lies a structural flaw: airlines purchase carbon credits approved by individual nations through Letters of Authorization (LoAs) and corresponding adjustments, yet these credits often originate from projects with questionable additionality — meaning they wouldn't have happened without the carbon payment. For African carriers operating regional and international routes, this creates both risk and opportunity.

## Why Is CORSIA's Design Allowing Low-Quality Credits?

The scheme permits national governments to designate which carbon projects qualify for CORSIA compliance. This decentralized approach was intended to encourage participation, but instead has created a race to the bottom. Countries desperate for investment approving marginal projects — tree-planting schemes of uncertain permanence, methane capture from livestock, renewable energy projects that were economically viable anyway — flood the market with credits of questionable integrity. Airlines, facing compliance deadlines and seeking the cheapest offsets, naturally gravitate toward weaker credits from nations with lax verification standards.

The International Carbon Integrity Initiative estimates that up to 70% of currently traded CORSIA-eligible offsets may not represent genuine emissions reductions. This dynamic undermines the entire scheme's credibility and creates regulatory arbitrage opportunities for sophisticated market players while penalizing serious actors.

## What Does This Mean for African Airlines?

African carriers — particularly those from Kenya, Nigeria, South Africa, and Ethiopia operating long-haul international routes — face mounting CORSIA compliance costs. Ethiopian Airlines, Kenya Airways, and South African Airways collectively operate over 200 international flights daily; each tonne of fuel burned requires offset purchases.

Yet the low-quality credit glut creates an advantage for African airlines willing to take reputational risk: compliance is achievable at rock-bottom prices. A flight from Nairobi to London might require 800 tonnes of offsets; purchasing low-integrity credits could cut costs by 40-60% compared to premium-grade offsets. However, this strategy exposes carriers to future regulatory clawbacks if CORSIA tightens enforcement or if airlines face pressure from ESG-conscious investors and passengers.

## Where Is This Heading?

The International Civil Aviation Organization (ICAO) faces mounting pressure to overhaul CORSIA's credit-approval architecture. Likely reforms include centralized vetting, higher additionality standards, and exclusion of projects that were already economically rational. These tightening standards will likely drive credit prices upward 30-50% within 18 months.

For African airlines, the strategic window to lock in cheap compliance at current prices is closing. For investors in African aviation, carbon credit exposure is a material risk factor increasingly ignored by sector analysts.

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