The Airline Industry Has a $3 Billion Carbon Problem. It's About to Get Much Bigger

For six years, Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) has been something airlines could largely plan around. Volunteer if it made sense, sit it out if it didn't. That changes in 2027. Participation becomes mandatory for essentially every ICAO member state, pulling China, India, and Brazil into the scheme for the first time and pushing global emissions coverage well beyond where it sits today. For airlines that treated the first two phases as optional, the runway to prepare just got a lot shorter.

Offsetting 101, No Jargon

CORSIA requires airlines to offset international flight emissions that exceed a fixed baseline, currently set at 85% of 2019 emissions levels. Airlines meet that obligation either by buying carbon credits, called Eligible Emissions Units, or by using CORSIA Eligible Fuels, a category that includes sustainable aviation fuel. Since 2024, that's meant real, calculated obligations rather than voluntary reporting. In 2024 alone, the sector's growth above baseline triggered 55.6 million tonnes of offsetting requirements across participating airlines.

The Opt-Out Window Closes 

Phase 1 ran on voluntary participation; 130 states signed up as of early 2026, leaving major aviation markets free to sit it out. Phase 2 removes that choice. From 2027, offsetting requirements apply to flights involving nearly every ICAO member, with only a handful of exceptions carved out: least developed countries, small island states, landlocked developing nations, and countries that made up less than half a percent of global air traffic in 2018. Everyone else is in, whether they opted in before or not.

The scale of that shift shows up fast in the numbers. IBA forecasts airlines will need to offset 79.25 million tonnes of CO2 in 2027 alone, a sharp jump from where obligations sat during the voluntary years. The newly mandated regions carry a lot of that weight: China and India's expected participation alone could drive roughly 27 million tonnes of offset-eligible emissions, much of it concentrated in Asia-Pacific traffic that never faced these obligations before.

Big Carriers, Bigger Bills 

This isn't an evenly distributed cost. IBA estimates Emirates could face CORSIA-related compliance costs of up to $346 million in 2027, roughly 3.5% of its projected fuel budget for the year. The top ten airlines globally are expected to shoulder around 29 million tonnes of offsetting between them, driven by long-haul international networks that rack up emissions on exactly the routes CORSIA targets.

Prices aren't holding steady either. Credit supply remains tight; only a fraction of eligible carbon-reduction projects currently has the authorization needed to issue CORSIA-recognized credits, and demand is climbing faster than that supply can keep up. MSCI projects offset prices could reach $25 to $60 per tonne by the late 2020s, more than double where they've traded during the voluntary phase. Airlines that haven't locked in credit sources or built compliance costs into route economics are staring down a moving target.

ReFuelEU and CORSIA Overlap 

Here's the part that connects directly back to Europe's own fuel mandate. SAF purchased to meet ReFuelEU's blending requirements doesn't just satisfy that rule; it can also count against CORSIA's offsetting requirement, as long as it clears CORSIA's sustainability bar of at least a 10% lifecycle emissions reduction compared to fossil jet fuel. Airlines documenting SAF use properly, proof of sustainability, proof of purchase, and no double-claiming can apply that same fuel to shrink both bills.

That's a real advantage for carriers already flying SAF-blended fuel into Europe. Airlines operating primarily outside Europe's mandate zone don't get that same two-for-one benefit, and instead face CORSIA's rising credit prices with one less lever to pull.

Credits Are Scarce Too 

If this sounds familiar, it should. The credit shortage squeezing CORSIA in 2027 echoes the exact production bottleneck slowing SAF scale-up more broadly: plenty of theoretical potential, not nearly enough infrastructure built out to meet it. Just one carbon-reduction program, a reforestation initiative in Guyana, currently accounts for the bulk of authorized CORSIA credits on the market. Scaling beyond that depends on host countries speeding up authorization processes that have moved slowly so far, and there's no guarantee they move fast enough before 2027 demand hits.

What Comes Next

Airlines still treating CORSIA as background compliance have a narrowing window. The credits are getting more expensive, the participant list just expanded to include some of the world's largest aviation markets, and the airlines with SAF strategies already in motion are the ones positioned to offset costs on both sides of the Atlantic. For everyone else, 2027 isn't a distant deadline anymore; it's next year's budget.