Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and the demand for carbon credits in the coming period (Part 2)

Part 2: The demand for carbon credits by Vietnamese aeroplanes operators in the coming period

What are the eligible emissions units under CORSIA?

Only CORSIA Eligible Emissions Units (CORSIA EEU), which have been approved by the ICAO Council, can be used for offsetting requirements under CORSIA.

In the pilot phase (2021-2023): EEU includes all existing projects certified under the following standards have been approved to supply EEUs in the first phase, with no exclusions: American Carbon Registry (ACR) and Architecture for REDD+ Transactions (ART TREES).

Credits from the following programs can be used for offsetting under CORSIA during the specified phases, subject to certain specific conditions:

• BioCarbon Fund for Sustainable Forest Landscapes (ISFL)
• China GHG Voluntary Emission Reduction Program
• Clean Development Mechanism (CDM)
• Climate Action Reserve (CAR)
• Forest Carbon Partnership Facility (FCPF)
• Global Carbon Council (GCC)
• The Gold Standard (GS)
• SOCIALCARBON
• Verified Carbon Standard (VCS)

General conditions for all valid credits under CORSIA are units must derive from projects whose first crediting period started on or after January 1, 2016; and units must represent emission reductions between January 1, 2021, and December 31, 2026.

In the first phase (2024-2026): Credits from the American Carbon Registry (ACR) and Architecture for REDD+ Transactions (ART) programs have been approved by ICAO as valid for offsetting. Additionally, other standards such as VCS, GS, GCC, etc., have also been conditionally approved. The full approval process is expected to be completed by 2024.

Requirements for Corresponding Adjustments

Corresponding adjustments (CA) represent the basic rules for avoidance of double-counting for carbon credits traded on the carbon market. For transactions involving the international transfer of carbon credits (also known as Internationally Transferred Mitigation Outcomes, ITMOs) to achieve the Nationally Determined Contributions (NDC) targets of another country, or for other international mitigation purposes (OIMP) such as compliance with CORSIA, these carbon credits must be correspondingly adjusted with the emission reduction results and targets in the host country’s NDC.

In Vietnam, the Draft Decree amending and supplementing a number of articles of Decree No. 06/2022/ND-CP dated January 7, 2022, on greenhouse gas emissions reduction and ozone layer protection, has added content related to issuing Letters of Approval for the transfer of international carbon credits. This serves as the basis for state management agencies to oversee transactions involving the transfer of international carbon credits and to make corresponding adjustments to NDC targets. It is also a crucial requirement for current Vietnamese carbon credits to be traded for offsetting under CORSIA.

The demand for carbon credits by Vietnamese aeroplanes operators in the coming period

As mentioned above, CORSIA is currently in its first phase, which is voluntary. Therefore, only Vietnamese airlines operating flights connecting countries that voluntarily participate in CORSIA are required to comply with the emissions offsetting requirements under CORSIA.

In the future, if Vietnam does not participate in the voluntary phase, Vietnamese airlines will still be required to adhere to CORSIA’s greenhouse gas reduction requirements for their international flights starting January 1, 2027. As a result, the demand for carbon credits among domestic airlines is expected to rise significantly.

Currently, Vietnam has domestic carbon credit projects registered under standards such as GS, VCS, GCC, etc. Carbon credits from these projects could assist domestic airlines in offsetting their CORSIA obligations if they receive approval letters from the Vietnamese regulatory authorities.

Summary by Hong Loan & Linh Nguyen Le