08 January 2026
Navigating The Skies A Market Update on Carbon Credits and CORSIA
Gallagher Specialty’s Aerospace team is continually focused on enabling our clients to meet the challenges facing the air transport industry. Our approach is to maintain a clear perspective on regulatory requirements impacting the industry and evolve relevant insurance solutions to deliver to our clients. With this in mind, we have been collaborating with our colleagues in Climate Strategy and Carbon Insurance on the implementation of the CORSIA regime, which is scheduled to take effect in 2027.
The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) marks a structural shift in airline economics and regulatory oversight. As international regulators, investors, and customers demand measurable decarbonisation, airlines must elevate carbon exposure to a central risk category.
With CORSIA entering its second phase, it introduces mandatory offsets achieved through carbon projects for most international carriers, coupled with stricter verification and auditing.
CORSIA In Context
CORSIA is applicable to all airline operators that produce annual carbon emissions greater than 10,000 metric tonnes from international flights. CORSIA aims to stabilise the net international aviation carbon emissions against the CORSIA baseline (85% of 2019 emissions), through a phased compliance scheme.
The International Civil Aviation Organisation (ICAO) estimates that for the period 2024-2026, CORSIA offset requirements will range between 100 and 150 million tonnes of carbon equivalent.
Figure 1: Planned phasing for CORSIA
Airlines may need to purchase large volumes of CORSIA-eligible emissions units (CEUs) to meet their obligations.
Airlines Risk Landscape Under CORSIA
Airlines may need to purchase large volumes of CORSIA-eligible emissions units (CEUs) to meet their obligations.
CORSIA shifts large volumes of international aviation emissions onto airlines’ balance sheets via mandatory offset purchases through phase 1 (2024-2026) and phase II (2027-2035). Emissions units are eligible from projects that have insurance and began their first crediting period on or after 1 January 2016 and were generated in relation to reductions or removals between 2021 and 2026.
CORSIA credits must have insurance before they can be sold to ensure that credits are of high integrity and comply with the eligibility criteria established by the International Civil Aviation Organisation (ICAO). This includes protections against risks such as double-counting or withdrawal of their Letter of Authority (LOA). The supply of eligible credits may be constrained by this; however, insurance requirements potentially create a bottleneck for available credits.
ICAO-approved agencies for CORSIA eligible carbon credits are:
Insurance is not mandatory for carbon credits acquired outside of CORSIA, either by purchase or investment, which can expose buyers to broader risks, including non-delivery or invalidation of any purchased credits.
To navigate the carbon credit risk landscape, we can offer support for risk management strategies that leverage financial, insurance, and operational levers to enhance ongoing business resilience.
CORSIA eligible carbon insurance, purchased by an airline selected carbon project, protects against risks such as revocation of LOAs and failure by the host country to make corresponding adjustments to its emissions inventory under the Paris Agreement.
Additionally, there are insurance products available that mitigate against non-CORSIA-related carbon credit risks existing in the market. These include:
- Non-delivery risk
- Lender’s risk
- Invalidation risks, including:
Fraud or double-counting risks Reversal risks Change in methodology Project failure
Case Study Example
Most states in Asia are participating in CORSIA, and significant offsetting obligations were expected to take effect from 2024 onward. As part of an offsetting plan, a mid-tier Asian carrier with regional and long-haul routes, which emits approximately 900,000 tCO2 annually from its international operations, is considering purchasing CORSIA-eligible credits from a forestry carbon project developer.
To ensure adequate protection for the purchased credits, the airline must consider insurance coverage requirements.
The issuance of credits is expected to meet the following criteria:
- The project developer is registered through an ICAO-approved registry such as Verra, American Carbon Registry, and Gold Standard.
- Consider if the credits are within the eligible time window, depending on the compliance phase
- Delivery history of the carbon credit seller and financial strength
- The carbon project must have CORSIA insurance to sell CORSIA-eligible credits
At Gallagher, we offer bespoke insurance solutions from a dedicated multidisciplinary team to address risks associated with CORSIA and other carbon credit-related risks. With access to our dedicated carbon specialists, aligned carbon markets and extensive experience in aviation insurance, we can ensure “all risk” mitigation measures are explored, including CORSIA-compliant insurance solutions.
We are keen to discuss your CORSIA insurance needs with you, and the specialist team will be happy to arrange an exploratory meeting to support you. Please contact your Gallagher Specialty account executive or the team below. We very much look forward to working with you to address this new horizon of risk.
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