De-risking CORSIA: Navigating complexity and unlocking supply

Opening the event, Valerio Magliulo, CEO of Abatable, outlined the evolving dynamics of the CORSIA compliance market. His message was clear: the foundations are in place, but there’s still a long way to go. 

“When you're looking at what a successful CORSIA compliance really looks like, we’ve got to look at it from both the demand route and supply route,” Valerio stipulated. 

He highlighted the stark reality: while more than 5,000 carbon projects exist globally, only a tiny fraction currently meets CORSIA’s eligibility criteria. This creates a severe imbalance between supply and demand, forcing airlines to compete for a very limited pool of eligible credits. 

“Eligibility rules for projects are somewhat layered and complex… suddenly half of the projects are no longer eligible,” he said. 

This is where innovative risk management becomes critical. Valerio pointed to Howden’s role in approving insurance for eligible carbon credits as a way to de-risk projects and expand the pool of eligible credits, helping address the supply-demand challenge. 

Two dimensions of complexity 

• Supply side: Beyond the usual project lifecycle - development, financing, verification - CORSIA adds layers of complexity including host country authorisations and corresponding adjustments under Article 6. 

• Demand side: Airlines face challenges navigating eligibility, authorisations, and market imbalances. 

Major challenges identified 

The discussion highlighted four critical hurdles: 

1. Eligibility constraints 

Less than 5% of voluntary carbon market volumes are currently eligible for CORSIA¹. 

“Eligibility rules for projects are somewhat layered and complex… suddenly half of the projects are no longer eligible” said Valerio. 

2. Regional imbalances 
   Demand from airlines in Europe and North America far exceeds local supply, compounded by buyers’ preference for projects near their operations. 

3. Market convergence 
   Voluntary and compliance markets increasingly overlap, creating competition for limited eligible supply. 

4. Country readiness 
   Inconsistent policies and unclear roles within governments delay LoAs and corresponding adjustments. 

“There isn’t yet a framework for clear roles and responsibilities within a government… Is it the Ministry of Transport? Economic Development?” asked Valerio. 

Insurance: A game-changer for supply 

An important conversation led by Charlie Pool, Head of Carbon Advisory, Howden, was the role of insurance in unlocking supply. 

“Insurance is really key in making sure that we can unlock supply at an earlier point for CORSIA at phase one,” Hugh Salway, Gold Standard 

Hugh added a memorable analogy to explain the commitment behind LoAs: 

“An LoA is like a marriage proposal - it’s a serious commitment. Not everyone who engages is that committed, so that’s why we need insurance.” 

• Approved by Gold Standard and soon by Verra, insurance mitigates risks of LoA revocation or failure to apply corresponding adjustments. 

• Policies require A-rated insurers and standardised criteria to avoid fragmentation. 

• Initially, insurance is held by project developers, and it protects them from political risk, ensuring clarity for buyers. Find out more here. 

Market outlook and next steps 

The first CORSIA-labelled credits are expected soon, but supply remains constrained. Three “taps” must be opened: 

1. Standards eligibility 

2. Insurance approval 

3. Host country readiness 

“Capacity building for governments is critical - executive-level education and cross-ministerial coordination needed to accelerate readiness” said Juan Carlos Arredondo Brun, Member of Technical Advisory Body (TAB) for CORSIA & Director of Knowledge, Policy and Advocacy, Abatable. Juan Carlos joined remotely from ICAO’s 42nd Assembly – read his insights from that event here. 

Airline perspective 

Airlines face high compliance risk due to limited eligible credits and dependency on host country authorisations. As Diego said, “the scheme was signed off by countries, but the obligation falls on airlines.” He said that one of the biggest needs is for the countries to provide the corresponding adjustments to help with supply. He shared that their procurement strategy leans toward diversified portfolios, with preference for regional projects aligned with brand and biodiversity goals. But he noted that most of the units available in South America, which are nature-based solutions and large-scale renewable energy projects, are mostly excluded.  

“We envision CORSIA as a vehicle for biodiversity and ecosystem preservation,”  said Diego Martinez del Rio, LATAM Airlines.

Developer perspective 

Host country complexity is a major bottleneck, requiring political, fiscal and technical alignment. Only ~40 countries are expected to achieve readiness by 2028, with ~10 providing 80% of supply. 

“It’s not a lot of humans that need to be talked to, but they’re all time-poor and difficult to access” said Greg Murray, CEO and Co-Founder, KOKO Networks. 

Bottom line 

CORSIA represents a critical pathway for aviation decarbonisation, but unlocking its potential requires collaboration across governments, standards bodies, insurance and airlines.  

The event showed that, while the CORSIA framework may still be in its early stages, the spirit of cooperation is strong and insurance has a key enabling role to play.   

¹ Source: clearbluemarkets.com/knowledge-base/corsia-phase-1-crediting-program-updates