New Abatable Analysis: Carbon Credit Demand Will Exceed Supply

New Abatable Analysis: Carbon Credit Demand Will Exceed Supply - Carbon Herald

A new report published by carbon intelligence and procurement platform Abatable suggests that CORSIA carbon credit demand will outstrip supply by 2030. 

Considered to be among the hard-to-abate sector, the aviation industry is responsible for some 3% of global greenhouse gas (GHG) emissions. 

There are multiple decarbonization pathways for aviation, including the development and wider adoption of sustainable aviation fuel (SAF) and electrification, but these will require more time before they become affordable and accessible at a larger scale. 

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Meanwhile, the solution to addressing emissions in the sector is the adopted in 2016 Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA.

The first phase of CORSIA officially commenced in January 2024 and will continue until 2026, involving only nations, which have volunteered to participate. 

From 2027 onwards, phase two of CORSIA will see the scheme become mandatory, requiring all airlines to use SAF, increase their fleet efficiency or buy carbon credits. 

Challenges ahead

Currently, one of the main obstacles CORSIA participants face is the lack of enough eligible standards, through which credits can be acquired. 

Namely, there are only two such standards – American Carbon Registry (ACR) and ART TREES, which in addition to the requirement for credits to have Letters of Authorisation from host countries, creates a significant roadblock for supply. 

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In fact, only a single issuance of credits in the amount of 7.1 million Guyana ART credits is deemed eligible for the scheme, which the International Civil Aviation Organization (ICAO) believes may remain the only one for the rest of this year. 

As we are currently not seeing new supply of carbon credits, Abatable’s report outlines the high likelihood that demand for these credits will far exceed supply by 2030. 

According to the analysis, unless new projects appear that will generate credits, demand will be 14 times greater than supply already between 2029 and 2030. 

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