Guyana to sell first eligible carbon credits under airline emissions scheme

(Reuters) Guyana will make the first eligible carbon credits available to airlines to counter pollution under the start of a landmark U.N. emissions deal, a government official told Reuters on Wednesday, in what some industry groups fear will be a rare offering.

Almost 5 million credits that support the country’s rainforests can be purchased by airlines to cover their obligations during the first phase of the U.N.-brokered CORSIA deal which starts this year, said Pradeepa Bholanath, a director at Guyana’s Ministry of Natural Resources.

Airlines now buy carbon credits voluntarily. Under the 2016 CORSIA deal approved by the U.N. International Civil Aviation Organisation’s (ICAO) assembly, carriers from more than 100 participating countries would have to offset rising emissions above the baseline of 85% of 2019 levels.

Airline trade group IATA expects that threshold will be crossed this year, with ICAO projecting 2024 passenger air traffic levels to be around 2% higher than in 2019.

With sustainable aviation fuel (SAF) from products like used cooking oil in short supply, airlines are largely relying on offsets to counter emissions, as they face opposition to pollution from flights.

But with few eligible credits now available for airline purchase under CORSIA’s first phase from 2024 to 2026, some industry groups fear a looming supply shortage.

Countries have been asked to take steps to prevent so-called “double claiming,” where credits supporting projects bought by airlines are not also used to meet national obligations under the Paris Agreement on climate change.

Guyana is the first country to fulfill that requirement, said Mary Grady, manager of two crediting programmes approved by ICAO to supply credits for CORSIA’s first phase.

“We haven’t seen any other countries that have pledged that they are planning to do it for CORSIA,” she said.

Some industry estimates project airlines will need 100 million to 200 million credits for CORSIA’s first phase.

While the U.S. Federal Aviation Administration has said requirements during CORSIA’s first phase will be calculated in 2026, IATA said carriers can start buying credits earlier.

IATA said constrained supply of credits could “deny aircraft operators the ability to strategically plan” their compliance.

“For CORSIA to succeed, there will need to be an adequate supply of units available for compliance,” added U.S. airline trade group Airlines for America. “U.S. airlines want to ensure that sufficient units are available.”

ICAO said it currently considers the implementation of CORSIA to be on track.