Airlines are bracing for an estimated $127 billion in extra costs by 2040 as they face a critical shortage of carbon credits required by the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). This scheme mandates that airlines offset emissions growth above 2019 levels. From January 2027, CORSIA moves into a mandatory phase, encompassing over 85% of international aviation emissions. This transition will significantly increase demand for Eligible Emissions Units (EEUs), which are already in short supply.
The International Air Transport Association (IATA) projects that airlines will need between 146 million and 236 million EEUs for the 2024-2026 phase alone. However, as of early 2026, only about 32 million tonnes were available, and only 15.8 million tonnes had received the necessary host country authorization. This substantial gap is expected to widen, with a projected 63 million tonne deficit for the first year of mandatory compliance in 2027. This could drive credit prices up by as much as 900%, from a current average of $4-$6 per tonne to $25-$60 per tonne.
The impact on airline profitability is material. For instance, Emirates, with its exclusively international long-haul network, could face compliance costs of up to $346 million in 2027 alone. This figure rivals the list price of a new Airbus A350-1000 and represents a strategic threat rather than a mere operational expense for carriers operating on thin margins. European airlines like Lufthansa, IAG, and Air France-KLM are each exposed to over $1.5 billion in EU carbon costs, in addition to CORSIA obligations.
The core of the problem lies in the slow authorization of credits by host countries under Article 6.2 of the Paris Agreement. While over 4,000 projects are theoretically eligible, less than 16 million tonnes of credits have received the required Letters of Authorization (LoAs). IATA has established the "Supporting Alliance for CORSIA EEU Supply" to provide technical assistance to host countries and aims to make 225 million to 250 million CORSIA EEUs available by spring 2027. Without sufficient supply, airlines face risks of non-compliance, price volatility leading to increased operational costs, and the potential need to seek alternatives such as Sustainable Aviation Fuel (SAF) or efficiency measures to reduce emissions.
