IATA urges governments to issue LoAs to unlock carbon credits for airlines

The International Air Transport Association (IATA), joined by global airline associations, carbon market stakeholders, and project developers, has sounded an urgent alarm over the critical shortage of carbon credits available to airlines under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Without immediate government action to authorize the release of credits, the industry warns that the scheme—an essential pillar of aviation’s climate strategy—could falter, undermining both environmental goals and vital climate finance flows.

The role of CORSIA in aviation’s climate strategy

CORSIA, adopted by the International Civil Aviation Organization (ICAO) in 2016, requires airlines to offset emissions from international flights by purchasing CORSIA Eligible Emissions Units (EEUs). These credits represent verified emission reductions achieved in other sectors, ensuring that global aviation growth does not translate into unchecked emissions.

“CORSIA is a vital part of aviation’s global climate strategy,” explained Yue Huang, IATA’s Assistant Director for Climate Policy, during ICAO Skytalks at the 42nd ICAO Assembly in Montreal. “Through it, airlines mitigate their climate impact by funding verified emissions reductions in other sectors. To unlock CORSIA’s potential, states must authorize the release of EEUs.”

Why Letters of Authorization (LoAs) matter

At the heart of the issue are Letters of Authorization (LoAs)—documents issued by host countries that formally permit carbon credits to be used for CORSIA compliance.

• LoAs confirm that a carbon credit is recognized as an Internationally Transferred Mitigation Outcome (ITMO) under Article 6 of the Paris Agreement.

• They ensure environmental integrity by requiring host countries to make a “corresponding adjustment” to their Nationally Determined Contribution (NDC), preventing double counting of emissions reductions.

• Without LoAs, project developers cannot release credits for airlines to purchase, leaving the market severely undersupplied.

Currently, only Guyana has issued LoAs, making available just 15.8 million credits—a fraction of what is needed.

The looming supply-demand gap

IATA forecasts that during CORSIA’s pilot phase (2024–2026), airlines will require between 146 and 236 million EEUs. The stark contrast with the current supply of fewer than 16 million units highlights the urgent need for governments to act.

This gap threatens:

• Airline compliance with CORSIA obligations.

• Climate finance for projects in developing countries, which depend on credit sales to fund emissions reductions.

• The credibility of international aviation’s decarbonization commitments.

African perspective: a chance for equitable transition

At the ICAO Assembly, Adefunke Adeyemi, Secretary-General of the African Civil Aviation Commission (AFCAC), stressed the importance of unlocking CORSIA for Africa:

“Unlocking access to CORSIA-eligible units will enable Africa to show commitment to sustainability and shape global solutions with regional perspectives. This is about ensuring that our economies and operators benefit fairly from the transition to a low-carbon future.”

Guidance and support for states

To accelerate LoA issuance, IATA has published guidance documents and is organizing workshops and technical support to assist governments in navigating the complex process of aligning domestic systems with Article 6 provisions.

By standardizing and simplifying the process, IATA hopes to help countries—particularly developing economies—capture the benefits of climate finance while ensuring compliance with international agreements.

A broad coalition of support

The call to action has been backed by a diverse coalition of signatories, including:

Airline industry associations:

• IATA, African Airlines Association, Air Transport Action Group, Airlines Association of Southern Africa, Airlines for America, Airlines for Europe, Arab Air Carriers’ Organization, Association of Asia Pacific Airlines, European Regions Airline Association, Latin American and Caribbean Air Transport Association, and the National Airlines Council of Canada.

Carbon market stakeholders:

• International Emissions Trading Association, Global Carbon Council.

Project developers:

• Burnstoves, Hestian, Iceberg, Koko Networks, Korea Carbon Management, UpEnergy, Valor Carbon, and WeAct.

The road ahead

As the aviation industry works toward its net-zero emissions target by 2050, the proper functioning of CORSIA is seen as critical. Without swift government action to issue LoAs and authorize ITMOs, the scheme risks being undermined, leaving airlines without access to sufficient credits and depriving developing countries of climate finance.

The message from the coalition is clear: governments must act now to safeguard both the credibility of aviation’s decarbonization efforts and the flow of funding to climate projects worldwide.