CORSIA: Costs and Implications for the Airline Industry
Research Paper
November 22, 2024
Preview
Based on credit demand scenarios for over 400 airlines, this report analyzes the potential demand, supply and prices for credits under CORSIA, and how much the scheme could cost the airline industry in terms of higher ticket prices or lower profits.
Key findings include :
Cumulative demand for CORSIA-eligible carbon credits from airlines could range from 106-137 million tonnes of CO2 equivalent (MtCO2e) during Phase I (2024 to 2026) of CORSIA, rising to 502-1,299 MtCO2e during Phase II (2027 to 2035).
This demand could exceed the supply of eligible credits, with the need to use credits that have a corresponding adjustment expected to be the main limiting factor.
Modeling by MSCI Carbon Markets suggests that CORSIA-eligible credits could see prices in the USD 18-51 range per tCO2e during Phase I and USD 27-91 during the latter stages of Phase II (2033 to 2035).
At these prices, the costs to international airlines would be modest. If all costs were passed through to customers, the average international ticket price would rise by 0.5-1.0% during Phase I. Alternatively, if the whole cost of CORSIA compliance was to be absorbed by the airlines themselves, then Phase I could reduce their operating profits by up to 4%, though the impact on each individual airline is likely to vary materially.
Projected CORSIA prices for two of four modeled scenarios: High demand, tight supply and Low demand, loose supply (USD per tCO2e)
Data as of November 2024. Source: MSCI Carbon Markets
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