ANTALYA: Airlines may struggle to settle their offset bills when the first global scheme to make them pay for their planet-warming emissions takes effect because of a lack of available carbon credits, industry sources and analysts say. The aviation sector is not the biggest overall emitter of greenhouse gases, but it is one of the fastest-growing sources, and sustainable aviation fuel has yet to have any significant impact on curbing emissions.
Making the sector contribute more could be vital, especially for poorer nations, when finding cash for adaptation is likely to be one of the most intense debates at COP31, which began on Monday in Antalya, Turkey, and continues for two weeks. Transport is a key focus of discussions.
One ambassador said next year will be a litmus test of whether the global aviation credits scheme can make a difference. This is going to be a true test of if we could make real progress, Antigua and Barbuda's UN Ambassador Walton Webson said.
For well over a decade, airlines flying in European airspace have had to pay to pollute under the European Union's Emissions Trading System, but so far they have only reported on a voluntary basis to the global Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
Around 130 countries have signed up to the mandatory Phase 1 of CORSIA, running from January 2024 until the end of this year. Airlines under the jurisdiction of signatory countries will have to buy credits by the end of January 2028 or face penalties.
The first phase is expected to create demand for credits to cover up to 200 million metric tons of carbon, said Chris Leeds, Head of Carbon Market Development at Standard Chartered. Data from the UN body, the International Civil Aviation Organization (ICAO), and numerous industry experts underscore this challenge.
Credits for offsetting airline emissions could make the biggest difference in poorer countries, particularly at a time when a widespread cost-of-living crisis and reduced development aid budgets have made governments reluctant to promise financial help. Carbon markets will be ever more important in the future, Panamanian Environment Minister Juan Carlos Navarro said.
Typical offsetting projects include replacing polluting cooking stoves in developing countries with cleaner alternatives or preventing deforestation. Following scandals over fraudulent schemes, CORSIA has strict rules on what qualifies as a legitimate carbon offset, adding to the challenge of meeting growing demand.
Analysts predict that carbon credits will become increasingly expensive as these uncertainties are resolved.