The European Commission is considering new rules that would bar European airlines from using virtually all currently available carbon credits under the aviation sector’s CORSIA compliance scheme, according to a draft document reviewed by Argus, in a move that market participants are already calling a damaging outcome for supply.
The draft proposes excluding from CORSIA’s Phase 1 (CP1) credits issued under high forest, low deforestation (HFLD) methodologies—which reward the existence of carbon stocks rather than additional reductions—and credits from projects whose fraction of non-renewable biomass (fNRB) exceeds host country values under the Clean Development Mechanism’s TOOL33, version 3.0.
None of the existing CP1-tagged credits currently meet the proposed requirements, the Commission said. A jurisdictional REDD+ project in Guyana, which has issued around 25 million of the total 33 million credits in the scheme, was an HFLD initiative and would therefore be disqualified.
The document justifies the HFLD exclusion by stating that “crediting the mere existence of stocks does not contribute to addressing climate change, for which real additional anthropogenic impact on stocks are needed.” The fNRB restriction is aimed at curtailing over-crediting and aligning with Article 6.4 of the Paris Agreement.
Under the new proposal, clean cookstove projects could cancel a portion of their credits to bring volumes into line with appropriate fNRB values and become eligible retrospectively—making roughly 10% of existing credits compliant.
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According to Argus, the draft is described by one market source as a “sub-optimal outcome.” European airlines had already been holding off procuring CORSIA-eligible credits in anticipation of stricter EU requirements, while demand from Asian end users has also been dampened by budget pressures and uncertainty over Europe’s direction.
For Phase 2, covering 2027 to 2035, the Commission may go further still, potentially limiting eligibility to credits issued under Article 6.4’s Paris Agreement Crediting Mechanism (PACM).
CORSIA could boost carbon removal
As the EU considers excluding nearly all existing Phase 1 CORSIA credits, airlines could face a sharp supply squeeze just as compliance obligations begin. With only around 10% of current credits potentially remaining eligible, buyers may increasingly turn to high-integrity carbon removal credits, especially durable removals like biochar and DAC, to hedge future scarcity and price volatility.
ICAO has already confirmed airlines will receive their first offsetting requirements, while market analysts warn persistent shortages could create an “extreme situation” for compliance, pushing removals from voluntary climate claims into strategic procurement.
This shift is already visible in 2026 deal flow between aviation and carbon removal providers. In February, Senken and Exomad Green signed a multi-year agreement for 105,000 tonnes of durable carbon removal credits for aviation use between 2026–2028, sourced from industrial biochar operations in Bolivia.
Boeing also signed a 40,000-tonne biochar carbon removal deal with Carbonfuture in March 2026, adding to its broader push into durable removals for hard-to-abate aviation emissions. These agreements suggest aviation buyers are moving early to lock in scarce long-duration supply before compliance markets tighten further.
Additional reporting by Vasil Velev.
Read more: Looming CORSIA Deadline Exposes Gaps In Carbon Credit Supply, BeZero Says
