U.S. acceptance of global aviation market system could bolster the domestic market for offsets.
This is not fake news. This past week, the United States agreed to adhere to a global system for tackling greenhouse gas emissions in the aviation sector. Yes, I know it’s hard to believe, notwithstanding this administration’s position on the Paris Climate Accord, and steel and aluminum tariffs.
The system we’re talking about is the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), administered by the United Nations International Civil Aviation Organization (ICAO). This is a big deal, as U.S. airlines like United, Delta, and Alaska, among others, will be subject to comparable goals and requirements on sustainable fuels development, advanced fleet technologies, reporting and use of offsets. Perhaps backing CORSIA is a recognition that pulling out would be more harmful to U.S. airlines and undercut a body whose mission is to ensure globally uniform standards for an inherently international industry?
Regardless of the reasons, this measure signals that as of 2021 U.S. airlines will be part of a voluntary market, then starting in 2027, face compliance mandates that carry through to 2035. This is good news for the U.S. offset market, with estimates for offset demand ranging from 430-550 million metric tons throughout the 2020’s. For context, that is four times as many offsets issued in the California compliance market in its first 5 years of operation.
There are abundant opportunities across our country especially in natural and working lands, but many of these sectors and projects aren’t a right fit for the California compliance market. That leaves the voluntary market, which is a niche market populated by a few significant corporate buyers. The emergence of demand from U.S. airlines should bolster opportunities for these projects to reduce emissions and generate revenues.