Climate Impact X to offer contracts to airlines looking to offset carbon emissions

CARBON exchange Climate Impact X (CIX) on Thursday (Dec 12) launched the world’s first standardised contracts delivering carbon credits aligned with an international carbon-offsetting scheme for the aviation sector.

This move comes after the International Civil Aviation Organization (ICAO) approved four more carbon registries – Climate Action Reserve, Global Carbon Council, Gold Standard and Verra – to supply credits for the first phase of this offsetting scheme from 2024 until the end of 2026.

This brings the total registries to six, with the American Carbon Registry and the Architecture for Redd+ Transactions – a global initiative to reduce emissions from deforestation and forest degradation (Redd) – approved earlier this year.

Known as the Carbon Offsetting and Reduction Scheme for International Aviation (Corsia), the first phase of the offsetting scheme requires airlines to offset any carbon emissions above 85 per cent of 2019 levels to stabilise the sector’s net emissions.

With more carbon registries supplying credits to Corsia, CIX expects an increase in demand for Corsia-eligible credits and has designed the contract to meet the anticipated surge.

The Temasek-backed carbon exchange on Thursday said that this will be the first contract in the market to accept eligible carbon credits issued by all fully approved ICAO registries for the first phase of compliance between 2024 and 2026.

CIX is also the first exchange to connect to the complete network of registries currently fully approved by ICAO. Connectivity to these registries was an important pre-condition for reflecting a market-representative Corsia price, said the carbon exchange.

“CIX’s latest offering addresses key challenges in the Corsia and broader carbon markets, including fragmented liquidity and opaque pricing, by providing an efficient, standardised instrument for trading spot Corsia-eligible credits,” it added. It also said that this will unlock new opportunities for airlines and other market participants to trade emissions reductions at scale.

Only credits that have been explicitly labelled as Corsia-eligible or Corsia-compliant by the six registries will qualify for delivery in the contract. To ensure transparency and ease of access, CIX said that it will provide market participants with a daily updated list of eligible credits through its trading portal.

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Ellery Sutanto, head of exchange at CIX, said that the market needs a transparent and reliable pricing mechanism for Corsia-eligible credits, given that more registries and projects have secured approval from ICAO.

“Our new contract will help to facilitate on-screen price discovery, while providing an efficient instrument for airlines and market participants to access large volumes of credits eligible under Corsia Phase 1 as supply increases,” he explained. “This will lay the groundwork for a more liquid and well-functioning market.”

Aviation accounts for around 2 per cent of global greenhouse gas emissions, with airlines facing mounting pressure from regulators, consumers and investors to accelerate decarbonisation. 

CIX said that demand for Corsia-eligible credits is projected to grow exponentially as the deadline for airline operators to meet their obligations under the first compliance period approaches.

The International Air Transport Association projects demand to increase up to 162 million tonnes of carbon dioxide equivalent by 2026.