The European Commission is stepping back from plans to impose stricter quality standards on aviation carbon credits for the first phase of CORSIA, limiting the tougher requirements to Phase 2 of the aviation sector’s offsetting scheme in what it has described as a concession to member state and industry concerns.
The shift was confirmed in minutes from a recent Climate Change Committee meeting, as reported by S&P Global’s Platts.
Under the Commission’s earlier April proposal, more stringent eligibility criteria would have applied to credits used by European Economic Area (EEA)-based airlines for compliance under both phases of the Carbon Offsetting and Reduction Scheme for International Aviation.
The revised approach removes those additional requirements for Phase 1, which covers 2024-2026 emissions, while maintaining them for Phase 2, covering 2027-2035.
Specifically, the Commission has dropped provisions that would have barred Phase 1 credits from High Forest-Low Deforestation (HFLD) projects and from cookstoves or other projects displacing non-renewable biomass.
“The only, yet substantial, proposed change is the removal of the proposed additional quality criteria for credits used under Phase 1 of CORSIA,” the minutes stated, describing the decision as “a constructive gesture of goodwill” intended to secure a positive vote in autumn.
Market participants had widely anticipated the move given the limited time remaining in Phase 1 and the already constrained supply of eligible credits.
Relevant: New EU Draft Rules Could Disqualify Almost All Existing CORSIA Phase 1 Credits
Traders told Platts that a split approach between phases was the most likely outcome, with one Europe-based trader noting that European airlines would not commit to purchases without knowing precisely what they were permitted to buy. “It’s not a matter of prices, it’s about policy,” the unnamed trader was quoted as saying.
Under a scenario where stricter European Union rules apply only to Phase 2 credits, market participants anticipated fragmentation, with EU-eligible CORSIA credits trading at a $5-6 per tonne premium over non-EU eligible ones.
An uptick in Asian airline purchasing activity in the week of July 6, linked to Requests for Proposals (RFPs) totaling around 700,000 tonnes, was attributed in part to buyers seeking to secure prices ahead of the European Commission’s broader review of the EU Emissions Trading System (ETS) expected July 17.
Read more: Billions In CORSIA Compliance Spending Held Up By Missing Govt Approvals, Sylvera Warns
