Montreal: The International Air Transport Association (IATA), together with carbon market stakeholders, is urging governments worldwide to address the extremely limited supply of carbon credits available to airlines. These credits are essential for airlines to fulfil their obligations under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

According to BERNAMA News Agency, the signatories specifically urged governments to issue Letters of Authorisation (LoAs), which enable the release of CORSIA-eligible emissions units (EEUs) for purchase by airlines. This was revealed in a joint statement by IATA and the stakeholders released at the 42nd International Civil Aviation Organisation (ICAO) Assembly in Montreal, Canada.

The release emphasized that the timely issuance of LoAs is key to creating a robust and transparent market for CORSIA EEUs. This move is considered vital for the successful implementation of CORSIA and for safeguarding the environmental integrity of international aviation’s climate commitments.

‘IATA forecasts that airlines will require between 146 and 236 million EEUs during CORSIA’s first phase (2024-2026). However, the current supply of CORSIA-eligible units is limited to the 15.8 million credits made available by Guyana,’ the statement noted.

LoAs are official documents issued by host countries authorising the use of carbon credits (known as Internationally Transferred Mitigation Outcomes, or ITMOs) for CORSIA compliance, according to Article 6 of the Paris Agreement. These letters confirm that the emissions reductions associated with a carbon credit will only be counted once, as part of CORSIA, by requiring the host country to apply a ‘corresponding adjustment’ to its own Nationally Determined Contribution (NDC).

Without LoAs, airlines face a shortage of CORSIA-eligible units, placing CORSIA in jeopardy and depriving project developers of airline funds as a source of climate finance. To assist states in issuing LoAs, IATA has published guidance documents and offers practical tools and workshops.

CORSIA is a scheme to mitigate carbon dioxide (CO2) emissions for the global aviation industry. Malaysia, along with 104 other countries, has been participating voluntarily in CORSIA since July 2022, while also being involved in efforts to include oil palm biomass as part of the CORSIA Eligible Fuel Criteria in 2021.