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Airlines to invest $600 million in carbon offsets for 2024

Airlines are set to invest $600 million in carbon offset credits in 2024, according to the International Air Transport Association (IATA). This move aligns with the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), a UN-led initiative aimed at stabilising carbon emissions.

Airlines to invest $600 million in carbon offsets for 2024_A plane flying towards the sun above a forest. AI generated picture_visual 1A plane flying towards the sun above a forest. AI generated picture.

CORSIA mandates that airlines offset emissions above 2019 levels. From 2024 to 2026, emissions must be reduced to 85% of 2019 levels, with full compliance required by 2028. CORSIA-eligible emissions units (EEUs) are crucial for meeting these targets.

IATA's annual congress in Dubai projected the cost of CORSIA-related offsets to reach $600 million in 2024. This estimate is based on an anticipated demand of 9 to 31 million EEUs, priced at an average of $30 per unit. This figure applies specifically to 2024.

Read more: Securing the skies: carbon insurance and CORSIA's impact

The current supply of EEUs is sourced from a few accredited carbon standards and registries. A significant contribution comes from Guyana’s avoided deforestation scheme, which issued 7.1 million CORSIA-compliant credits in 2021.

Financial services and commodities trading firms are expected to lead EEU purchases, with airlines increasing their buying from next year. Airlines have been cautious, awaiting more clarity on credit supply and standards accreditation. The US government’s support for high-integrity voluntary carbon markets, including CORSIA, has bolstered confidence in EEU purchases.

Read more: What makes DGB’s reforestation projects unique?

Concerns about the revocation risks of CORSIA-compliant credits persist. However, political risk insurance and carbon credit buffers might mitigate these issues, potentially leading to positive accreditation decisions for registries like Verra and the Gold Standard by September. A significant increase in credit supply is not expected until 2025.

The demand for EEUs will also be impacted by the adoption of sustainable aviation fuel (SAF) and the deployment of new fuel-efficient aircraft. IATA forecasts that SAF supply will triple this year, reaching 1.5 million tonnes and adding approximately $2.4 billion to airlines' fuel expenses. IATA anticipates a strong recovery in aviation, with passenger demand expected to surpass pre-pandemic levels. Global customer numbers are projected to grow by 10.4% this year, led by the Asia-Pacific region. Despite financial and operational challenges, strategic investments in offset credits and sustainable fuel are set to help the aviation sector progress toward its climate goals.

Amidst transformative shifts in the carbon market and the rising demand for CORSIA-compliant carbon credits, now is the perfect time to seize this opportunity. With the demand for high-integrity carbon offsets increasing, DGB Group can help companies in this industry achieve their sustainability goals. With DGB’s diverse and tailored green solutions, including verified high-integrity carbon credits, you can take action today to reach your net-zero goals, make a positive environmental impact, and benefit from the dynamic growth of the carbon market.

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