CORSIA futures prices surged on Thursday, adding over 100% in the space of two days and reaching a price of $20 per ton.
Industry professionals have attributed the jump to a decision by the International Civil Aviation Organization (ICAO) to grant only conditional approval to four leading carbon market registries – Verra, Gold Standard, Climate Action Reserve and Social Carbon. The first three (together with American Carbon Registry) currently account for the largest volume of issued credits.
The development appears to have acted as a perceived constraint on supply, creating more competition for those credits that will be available to a growing number of buyers in the near future.
The main reason for ICAO’s decision appears to be the lack of approval of UN processes that determine how credits are counted and transfered, especially in the case of double claims
As it stands neither Article 6.2 (which determines how countries account for their emission reduction activities and exchange credits), nor Article 6.4, the framework that will create a global carbon credit market, have been finalized.
Full approval has already been granted to two registries – American Carbon Registry and the Architecture for REDD+ Transactions. They will be able to issue credits in CORSIA’s upcoming Phase I (between 2024 and 2026), while the rest are working to join in at a later stage.
ICAO’s Technical Advisory Body has provided detailed feedback on the requirements that need to be met, including them in its assessments and recommendations in January.
The conditional approval of the three big registries is not final and ICAO has provided a timeline for changes to be made. The 15th of April has been given as the first resubmission deadlinefor CORSIA documentation with a review planned for September 2024.
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