The CORSIA Credit Market: Price, Authorisation and Insurance

At a Glance: Where Things Stand

The CORSIA market is short, by about 82 Mt to 31 January 2028 on the base case of the Climate Decode assessment, and the price has nonetheless fallen from $18 to $9 a tonne within six months and recovered only in part, since airlines cannot be certain that their states will enforce cancellation, that host governments will maintain the authorisations already issued, or that the insurance standing behind unadjusted credits will respond to a claim.

Both sides of the market are likely to grow from the middle of 2027. More buyers should enter in the second half of the year, as the 2026 growth factor is published, the European Union settles which credits its airlines may use and the settlement date approaches, and more credits should follow as host countries finalise their Article 6 frameworks and as the Article 6.4 mechanism seeks recognition under CORSIA. Demand will not be indifferent to what it buys, however, since a number of airlines are unwilling to place their reputation on cookstove credits and several prefer credits from their own region, and the withdrawal of an authorisation after issuance, which Malawi and Rwanda have already recorded, remains the principal risk to every unit in the pool.

A stable market accordingly requires authorisations that cannot be withdrawn once units are issued, enforcement published by the states holding half of the obligation, and insurance capacity proportionate to the volume it is expected to unlock, and until these are in place airlines will pay a premium for named projects and guaranteed delivery and defer the remainder of their purchasing, whereas host governments and developers will bear the cost of the uncertainty in the price they receive.

The ICE CORSIA Phase 1 futures contract for December 2026 settled at a peak of $18.10 a tonne between 10 and 15 December 2025, fell to $9.15 on 23 and 24 June 2026 and settled at $13.00 on 15 October 2026, such that the price halved within six months and has since recovered only in part, without any change in the obligation, whereas the Climate Decode assessment places Phase 1 supply at 64.5 Mt, being 43.5 Mt already issued and eligible on the registries and about 21 Mt expected before settlement, against expected demand of 146.1 Mt, a shortfall of about 82 Mt to 31 January 2028.^1,2,3 A market pricing that shortfall against a fixed deadline would be expected to trade higher, and the assessment accordingly reads the price as the probability that the obligation is eased, deferred or not enforced rather than as a measure of scarcity.

Figure 1 · ICE CORSIA futures, daily settlements: the Phase 1 December 2026 contract from August 2024 and the Phase 2 December 2028 and December 2030 contracts from their listing in April 2026, to 31 July 2026, with the December 2026 settlement of 15 October 2026. Sources: ICE Futures Europe; Climate Decode Market Watch.

Market indications divide the price further by the certainty attached to each instrument, since a credit whose project and host country are named was indicated on average $3.75 above a credit where the seller selects the project between March and July 2026, and guaranteed forward delivery was indicated $0.75 above delivery conditional on authorisation for 2026 and $2.20 above it for 2027.² Both spreads are a price for certainty of authorisation, and both exceed the 2% to 4% of credit value at which political risk cover for Article 6 is quoted.

Table 1 · CORSIA Phase 1 prices, 31 July 2026. Sources: ICE Futures Europe; market indications; Climate Decode Market Watch.

Trading on ICE has increased as the settlement date approaches, open interest in the Phase 1 contract reaching a record 2.5 million units in October 2026 after a record month of volume in September, although that open interest remains below 6% of the 43.9 Mt that ICAO reported as issued and labelled eligible on 29 September 2026.³

ICAO sets no penalty and holds no fund, such that the obligation is enforced only through national law, and the Climate Decode readiness scorecard finds that 116 of 126 participating states have no penalty, 107 have not notified any operator of its obligation and 93 have published no procedure for cancellation.² The United States, the United Arab Emirates and the United Kingdom account between them for about a third of covered emissions, none has published a penalty or recorded a cancellation and none has fully notified its operators, and the assessment accordingly applies a cancellation rate of 50% to 60% to the second tier and an overall conversion of 71.8%, which reduces a gross obligation of 203.4 Mt to expected demand of 146.1 Mt.

Table 2 · Legal position of participating states on the CORSIA obligation. Source: Climate Decode Market Watch, national legal registers of 126 states, August 2026.

ICAO revised the 2024 sectoral growth factor on 12 December 2025, after the 30 November notification date fixed in eleven states, and no reissued notification had been found in any state at the time of the assessment, whereas the European Commission proposed on 17 July 2026 to extend the EU ETS from 2029 to departing flights within 5,000 km of Europe, deducting the cost of CORSIA offsetting on overlapping routes, a proposal ICAO has opposed as double charging.^2,4,5 Part of future demand therefore depends on a negotiation between the European Union and ICAO as well as on national enforcement.

Confirmed cancellations of about 0.4 Mt, of which Japan Airlines and Singapore Airlines account for 99.6%, are consistent either with airlines purchasing late against a January 2028 deadline or with airlines in the second tier not purchasing at all, and the two readings cannot be distinguished until ICAO publishes Part V of its transparency data, reconciling offsetting requirements against units cancelled, for which no edition and no timetable has been published.²

The full Climate Decode CORSIA assessment covers 126 states, 111 supplying countries, the insurance market and price paths to 2035. Briefings are available for airlines, developers and host governments.

A CORSIA credit is built in layers, each of which can fail independently of the others. At the base, the credit must come from an ICAO-approved programme, under a methodology inside the published scope, from a crediting period beginning on or after 1 January 2016 and with a vintage inside the window, being 2021 to 2026 for the first phase and 2021 to 2029 for the 2027–29 period. Above that sits the host country’s own Article 6 framework, being its designated authority, its registry, its export posture and the headroom its NDC leaves, then the letter by which the host authorises the unit for CORSIA, and then the corresponding adjustment by which the host removes the tonne from its own account.¹⁶

Figure 2 · The layers of a CORSIA-eligible unit, with the insurance bridge before the adjustment is reported and the risk of rollback above it. Sources: ICAO, CORSIA Eligible Emissions Units, April 2026; Climate Decode CORSIA assessment.

The adjustment is verified only once it is reflected in the host’s biennial transparency report, the next round of which falls due by 31 December 2026, and until then Gold Standard and Verra accept a programme-approved guarantee covering the units under the letter of authorisation in its place, such that insurance is a bridge to the transparency report rather than a permanent layer, and a unit whose adjustment has been reported needs no insurance to remain eligible.¹⁶ The layer that no product covers fully is the host’s policy itself, since a government whose authorised volume proves inconsistent with its NDC may roll back an authorisation in part or in full, which is what makes a CORSIA credit both a riskier and a more interesting asset than its label suggests.

Authorisation is the condition on which CORSIA supply depends, and the policies of host governments have moved in both directions within the first compliance cycle. Kenya described carbon credits in 2023 as its next significant export, yet the letter of authorisation expected by KOKO Networks, a cookstove developer with about 15 million credits in the market, was not issued, the company closed in early 2026, CORSIA futures fell the same week, and in June 2026 Kenya announced a limit on Article 6 transfers that the assessment carries as a ceiling of 10 Mt.^2,6,7

Reversal is also recorded on the registries themselves. In the Gold Standard records held by Climate Decode, the Government of Malawi has withdrawn its authorisation from 131,839 t of the 2022 vintage across seven activities of the Hestian cookstove programme, whereas the 2021 vintage of the same seven activities remains authorised for CORSIA, and the Government of Rwanda has withdrawn its authorisation from 20,657 t of the 2023 vintage of a water purification programme, such that a host government may maintain an authorisation for one vintage and withdraw it from the next within a single programme.¹⁵ The 130,000 t retired for Japan Airlines from the Malawi programme are of the 2021 vintage and are unaffected, whereas a holder of the 2022 vintage now holds a credit whose eligibility was removed after issuance, which is the risk the insurance products set out in section 5 are written to cover.

Table 3 · Authorisations withdrawn by host governments after issuance, Gold Standard. Source: Climate Decode registry data, Gold Standard issuance records as at 3 August 2026.

Ghana, which scores 21 of 21 on the Climate Decode readiness scorecard, has authorised 6.7 Mt of the 402 Mt for which authorisation was requested, Cambodia has authorised 4.19 Mt for other international mitigation purposes rather than for transfer to another Party, and Guyana’s 24.9 Mt, being 57% of the 43.5 Mt eligible stock, is held in a registry account without a named acquiring Party, such that readiness does not predict supply and the largest single source of Phase 1 credits rests on one host’s policy and one registry’s accounting.² Of the 43.2 Mt authorised, a corresponding adjustment has been applied to 24.9 Mt and not to the remaining 18.4 Mt, which is an undertaking by the host government rather than a completed accounting entry.

The policy behind those letters differs host by host, in the ceiling each places on authorisation and in the bilateral instruments it has signed, and the hosts with the most developed machinery are set out below.

Figure 3 · Host-country Article 6 policy for the highest-scoring hosts: status in the supply model, the ceiling on authorisation and the bilateral instruments on the register. Source: Climate Decode Market Watch, instrument register of 121 agreements, August 2026.

Table 4 · Declared, authorised and transferred volume. Source: Climate Decode CORSIA assessment, authorisation and transfer register, August 2026.

ICAO has tightened the requirements for host-country attestations for the 2027–29 period, such that each letter must state the vintages, the activity type, the compliance cycle, the timing of corresponding adjustments and the accounting method, and must confirm that the units will not count toward the host’s NDC, which should make letters more insurable while lengthening the time taken to obtain them.⁸ IATA reported 42 CORSIA-compatible letters covering 72 million units in August 2026, against 40 million at the start of the year, and ICAO joined the IATA-led alliance supporting host governments with authorisation on 13 October 2026, whereas the volume of letters remains well ahead of the volume of credits issued and labelled against them.^3,9

Supply is nonetheless widening at the level of policy. In August 2026 Nigeria authorised its first CORSIA-eligible units, with letters covering close to 4 Mt, Rwanda authorised a further 1.77 Mt from a cookstove project for CORSIA use, Zambia launched its national registry and authorised its first activities with Switzerland, and Ecuador adopted its first framework for the authorisation and transfer of mitigation outcomes, whereas Chile expects to hold 17 or 18 letters of authorisation by the end of the year and Peru a further 11, and Türkiye brought its emissions trading regulation into force on 27 August 2026 after publishing a draft regulation on carbon credits and Article 6 in 2025.^17,18,19 Countries finalising their frameworks now will not reach Phase 1 in volume, given an authorisation lag of three to eight years in the assessment, but they will shape the supply available from 2028.

The Article 6.4 mechanism could add supply on a larger scale. Its Supervisory Body wrote to ICAO in September 2025 asking for an early decision by the Council to admit its units to CORSIA, while stating that its submission did not constitute an application by a programme, and no such decision has yet been taken; the mechanism approved its first issuance, of 648,783 units from a cookstove programme in Myanmar, in February 2026, 418 CDM activities had been approved by their hosts for transition by June 2026, and registered activities represent about 39 Mt a year against a further 509 Mt a year proposed.^20,21 The European Commission has also indicated that it may limit the eligibility of credits for EU airlines in the second phase to units from the mechanism, such that recognition of the mechanism by ICAO would decide whether that volume reaches European demand at all.²²

Gold Standard and Verra accept a programme-approved guarantee in place of a corresponding adjustment verified in the host’s transparency report, as do the two World Bank forest facilities for the first phase, and Gold Standard has approved five insurance policies for the purpose, the most recent being from Blenheim Partnerships in July 2026, the first traditional political risk insurer to enter the market.¹⁰ The insured route is the only mechanism able to increase CORSIA supply without further action by a host government, and Artio and AlliedOffsets estimate that it could add 64 million units to the first phase.²

Figure 4 · Insurance policies approved by Gold Standard to stand in for a corresponding adjustment, and the state of corresponding adjustments across the authorised pool. Source: Climate Decode Market Watch, August 2026.

The capacity behind those policies is small relative to that estimate, since only two insurers disclose a limit, CFC at up to $20m per project and Kita at £22.5m per risk, and the City of London Corporation reports gross written premium across all UK carbon insurance of about £20m in 2025, whereas insuring 64 Mt at present prices implies an exposure of $0.5bn to $3.2bn.² No policy has yet been tested by a claim, and MIGA has noted that most letters of authorisation are too imprecise to be legally binding, which limits what insurers will cover until host-country practice is settled.¹¹

The insured route has nonetheless reached an airline, since 130,000 of the 180,000 Gold Standard credits retired for Japan Airlines in March 2026 came from the Hestian cookstove programme in Malawi, whose credits were labelled CORSIA-eligible in November 2025 with a corresponding adjustment applied by the Government of Malawi and Artio’s cover standing behind it.^2,12,14 Insurance has accordingly been bought so far as a second layer on top of a completed adjustment rather than in place of one, whereas its capacity to stand in for an adjustment that has not been made has been neither disclosed nor tested.

Under the criteria applied by the Technical Advisory Body the risk of a failed corresponding adjustment falls on the crediting programme rather than on the airline, such that an airline cancelling a labelled credit has discharged its obligation even if the host later withdraws its authorisation, whereas the reputational exposure remains with the airline whose name is attached to the retirement.¹¹

Jurisdictional forestry and cookstoves account for 97% of the stock an airline can purchase today, and both have been subject to sustained scrutiny on integrity, while the 2027–29 scope withdraws the CDM tool for the non-renewable fraction of biomass on which most cookstove credits are calculated.² The Japan Airlines sustainability lead stated in July 2026 that the airline has no settled means of judging the quality or the price of the credits it buys, and the airline has responded by spreading its purchases across jurisdictional forestry, two cookstove programmes and removals, which limits the effect of any single integrity finding on its position.¹³

A number of airlines are unwilling to place their reputation on cookstove credits however they are labelled, and the draft rules for EU airlines reported in April 2026 would exclude cookstove credits whose non-renewable biomass fraction exceeds the host-country value, together with jurisdictional credits issued under high forest, low deforestation methodologies, which on the Commission’s own reading leaves none of the current Phase 1 stock usable by European carriers without adjustment, and European airlines have deferred their purchasing until the rules are settled.²² Airlines also show a preference for credits from their own region, LATAM Airlines having described Colombian projects as of strong interest for CORSIA and Singapore Airlines having retired cookstove credits from Laos, which narrows further a pool already concentrated in Guyana and sub-Saharan Africa.^2,18

The concentration in Guyana now carries a reputational question of its own, since a single spreadsheet cell referring to the wrong baseline year over-stated the 2023 emission reductions of Guyana’s ART programme by about 40%, an error that passed verification, was raised with ART by Climate Focus in January 2026 and was made public by BeZero in October, when the 2023 vintage was rated D. Guyana has moved unsold 2023 credits into an ART administrator account, ART will cancel about 3.9 Mt once the corrected volume is verified, and Guyana and its marketer Mercuria state that none of the excess has been sold, such that no airline holds an over-issued unit, whereas neither party has yet explained how the corresponding adjustment for the cancelled volume will be treated. The integrity cost is likely to outlast the correction, since some airlines with developed procurement strategies were already avoiding Guyana credits, and an error of this kind in the largest source of Phase 1 supply strengthens the case of buyers who prefer to pay a premium for credits they can defend.²³

Integrity and price therefore point in the same direction for airlines, since the credits most likely to retain both their eligibility and their reputation, being named projects with authorisation issued and an adjustment applied, are those whose supply is smallest and whose price is highest.

Phase 1 settles on 31 January 2028, and a market that has priced the same shortfall at $18 and at $9 within six months gives neither airlines nor host governments a price on which to plan, such that the following measures should be taken before the second phase begins in 2027.

1. Host governments should issue authorisations that cannot be withdrawn once units are issued, and should report corresponding adjustments within the timetable stated in each letter.
2. Participating states in the second tier, among them the United States, the United Arab Emirates and the United Kingdom, should notify their operators of their obligations and publish a penalty and a cancellation procedure.
3. ICAO should publish Part V of its transparency data, reconciling offsetting requirements against cancellations by state, and should publish each sectoral growth factor before the notification dates fixed by states.
4. Insurers and crediting programmes should publish limits, country aggregates and claim terms, such that the capacity of the insured route can be measured against the volume it is expected to unlock.
5. Airlines should purchase named projects with authorisation in hand in tranches through 2027, and should price insurance into any credit whose corresponding adjustment has not been applied.

Part 1 sets out the Japan Airlines retirements and the Phase 1 balance in Japan Airlines and CORSIA Phase 1, the overlap of the EU ETS with CORSIA from 2029 is covered in the 5,000 km line, and the sovereign buyers competing for the same authorised supply in the Article 6 market the EU will buy from.

Climate Decode Platform

The figures in this article come from Climate Decode’s CORSIA assessment and Canopy Market Watch, which track eligible supply, authorisation and price across registries.

Climate Decode · Advisory

CORSIA procurement before January 2028

Climate Decode models obligations, screens authorised and insured supply, and builds multi-year buying strategies for airlines.

Notes

Sources

This article draws on Climate Decode’s CORSIA assessment. Figures are the assessment’s base case and will change as authorisations, sectoral growth factors and cancellations are published.