EU drops stricter carbon credit rules for CORSIA Phase 1

The European Commission has reversed its plan to impose stricter quality standards on aviation carbon credits for Phase 1 (2024-2026) of CORSIA, a concession to member states and industry. The revised approach, confirmed in Climate Change Committee meeting minutes, maintains tougher requirements for Phase 2 (2027-2035). This change removes provisions that would have barred Phase 1 credits from High Forest-Low Deforestation projects and those displacing non-renewable biomass. Market participants had anticipated this move due to the limited time remaining in Phase 1 and constrained credit supply. Traders expect a fragmented market, with EU-eligible CORSIA credits potentially trading at a $5-6 per tonne premium over non-EU eligible ones for Phase 2.