The global aviation industry has launched a new effort to solve one of its biggest net-zero challenges. It is trying to secure enough high-quality carbon credits.
The International Air Transport Association (IATA) recently launched the Supporting Alliance for CORSIA Eligible Emissions Unit (EEU) Supply. It brings together airlines, governments, carbon market players, investors, and civil society groups.
- The goal is ambitious. The alliance aims to increase the supply of 225 million to 250 million CORSIA-eligible carbon credits by spring 2027.
The move shows a key reality in aviation. Sustainable aviation fuel (SAF) is still the main tool for cutting emissions, but supply is still limited. Because of this, airlines will depend more on carbon markets in the short term to meet climate rules under CORSIA.
The alliance is not only about carbon credits. It also shows how aviation, climate finance, and carbon markets are becoming more connected.
A $5 Billion Carbon Credit Race Takes Flight
CORSIA stands for the Carbon Offsetting and Reduction Scheme for International Aviation. It was created by the International Civil Aviation Organization (ICAO) in 2016. It is still the only global market-based offsetting scheme for managing aviation emissions.
Under this system, airlines must offset emissions that go above set limits. They do this by buying and canceling approved carbon credits called CORSIA Eligible Emissions Units (EEUs).
These credits must meet strict environmental rules. They also need approval from host governments. This helps avoid double counting under the Paris Agreement.
The main problem is supply.
- IATA estimates airlines will need about 200 million CORSIA EEUs by January 2028. This represents a market worth about $4 billion to $5 billion. Demand could rise to nearly 2 billion EEUs by 2035 as rules expand.
Even with this demand, supply is still low. Many countries have not approved credits for CORSIA use. This creates a regulatory bottleneck. It is now one of the biggest risks for aviation’s climate plans.
According to Marie Owens Thomsen, IATA’s Senior Vice President Sustainability and Chief Economist,
“The Supporting Alliance will provide implementation assistance to clear this [double-counting] and other bottlenecks that prevent credits from coming to the CORSIA market. It should be noted that CORSIA will likely generate $4-5 billion of climate finance in the first phase, and potentially $100 billion by 2035, depending on market prices. This will help fund climate action, support remote communities, and spur economic development. We welcome all carbon market stakeholders and related organizations to join forces in the Supporting Alliance to help CORSIA realize its potential social, economic and climate benefits.”
The new alliance aims to fix this. It will help governments connect national climate goals with global carbon market rules under Article 6.2 of the Paris Agreement.
Aviation’s Net-Zero Path Is Becoming More Challenging
The launch comes at a time when airlines face growing pressure. They must cut emissions while air travel demand continues to rise.
The aviation industry has pledged to reach net-zero carbon emissions by 2050. IATA says Sustainable Aviation Fuel could deliver about 65% of the emissions cuts needed. However, SAF production is still very low.
IATA expects global SAF production to reach over 2 million tonnes in a low-case scenario. But this is only 0.7% to 0.8% of total aviation fuel use. This gap is large. But it can also increase up to 32 million in a high-case scenario.
SAF can reduce lifecycle emissions by about 80% compared with regular jet fuel. This makes it one of the most important tools for decarbonization. But high costs, limited raw materials, and slow production growth are holding it back.
Because of this, carbon credits are still a key bridge solution. They help airlines reduce emissions while SAF production scales up. This is also increasing demand for CORSIA-compliant credits and stronger carbon market systems.
From Voluntary Offsets to Compliance-Driven Carbon Markets
The alliance launch also reflects wider growth in global carbon markets. Over the past decade, carbon pricing has become a major climate policy tool. Governments, companies, and investors now see carbon markets as a way to fund emissions cuts and support net-zero goals.
For aviation, carbon credits help cover emissions that cannot yet be reduced with technology.
This is important because aviation is one of the hardest sectors to decarbonize. Unlike cars or trucks, long-distance flights still rely heavily on liquid fuels.
As demand for CORSIA credits grows, carbon project developers may see new opportunities. These include nature-based solutions, renewable energy, methane reduction projects, and engineered carbon removal. All must meet CORSIA rules and get government approval.
The creation of a dedicated alliance for credit supply shows a shift. Carbon markets are moving from voluntary tools to more structured, compliance-based systems for aviation. This shift could bring more investment into high-quality carbon projects worldwide.
Why the World’s Biggest Airlines Are Backing the Alliance
The alliance already has strong support from the industry. It includes more than 32 founding organizations. These include major airline groups such as:
- Air France-KLM,
- Lufthansa Group,
- Qatar Airways,
- Singapore Airlines,
- Japan Airlines,
- International Airlines Group (IAG),
- AirAsia,
- ANA, and
- SWISS.
Their participation shows how important future credit supply is.
Many airlines already invest in sustainability programs. These include fleet upgrades, efficiency improvements, SAF contracts, and carbon reduction projects. At the same time, airlines are under growing pressure from investors, regulators, and customers to improve climate performance.
Access to high-quality CORSIA credits may become more important as airlines meet both regulatory and ESG goals.
The alliance also creates a space for cooperation between governments, airlines, project developers, and financial institutions. This may speed up credit approval and improve transparency in the market.
A Carbon Market Test for Aviation’s Future
The Supporting Alliance for CORSIA EEU Supply could become one of the most important carbon market developments for aviation in recent years. The industry’s net-zero plan depends on SAF, efficiency gains, new technologies, and carbon markets. But the supply of both SAF and CORSIA credits is still below what is needed.
By targeting up to 250 million credits by 2027, IATA is trying to close a growing supply gap before it becomes a bigger compliance issue.
More broadly, this shows how carbon markets are becoming part of real decarbonization strategies. They are no longer just voluntary tools. They are now part of regulated systems for hard-to-decarbonize sectors.
For the airline sector, the pressure is high. Passenger demand is rising while emissions pressure is also increasing every year.
Whether the alliance succeeds or not, its launch sends an important message. The future of aviation net zero will depend not only on cleaner fuels and better aircraft but also on strong and scalable carbon markets.
The post IATA’s New Carbon Credit Alliance: Can Aviation Secure Enough Offsets for Net Zero? appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
-
Climate Change1 year ago
Guest post: Why China is still building new coal – and when it might stop
-
Greenhouse Gases2 years ago嘉宾来稿：满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
-
Greenhouse Gases1 year ago
Guest post: Why China is still building new coal – and when it might stop
-
Climate Change2 years ago嘉宾来稿：满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
-
Renewable Energy11 months agoSending Progressive Philanthropist George Soros to Prison?
-
Climate Change2 years ago
Bill Discounting Climate Change in Florida’s Energy Policy Awaits DeSantis’ Approval
-
Greenhouse Gases1 year ago
嘉宾来稿：探究火山喷发如何影响气候预测
-
Carbon Footprint2 years agoUS SEC’s Climate Disclosure Rules Spur Renewed Interest in Carbon Credits