Carbon credits shortage may lead to higher air fares for travelers

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🗞️ Driving the news: The aviation industry is facing a carbon credit shortage, potentially leading to higher airfares
• Airlines purchase carbon credits to offset the CO2 emissions generated by flights, but the supply is lagging behind demand, particularly in light of the CORSIA initiative, which aims to offset international aviation emissions starting in 2027
• This shortage could push prices for carbon credits from $23 to as high as $35 per ton, adding to the operational costs of airlines and, ultimately, to the ticket prices

🔭 The context: Under CORSIA, airlines must offset emissions above 85% of their 2019 levels
• The program is vital for reducing aviation's carbon footprint, but a shortfall in the carbon credit supply has created a tension between environmental goals and economic feasibility
• The World Bank is introducing a guarantee agency to address these issues, but challenges remain, especially in balancing climate targets with the limited availability of credits

🌍 Why it matters for the planet: As the world seeks to curb climate change, aviation’s significant contribution to emissions is being targeted
• Carbon markets like CORSIA are crucial for ensuring that airlines take responsibility for their carbon emissions
• However, the industry's reliance on a fluctuating supply of credits highlights the challenges of meeting international climate commitments, particularly when the cost of credits rises, potentially affecting global air travel accessibility

⏭️ What’s next: Governments and airlines will need to navigate this shortage carefully
• Airfares are expected to rise as the market for carbon credits tightens, while more governments are likely to explore ways to increase the supply of eligible credits or revise current regulations

💬 One quote: "Airlines may have to pay more for carbon emissions if the supply remains tight, or they might also lose money because they are fined for not meeting emissions and deadlines," according to Skift

📈 One stat: The shortfall in eligible carbon credits could lead to prices for carbon credits rising from $23 to $35 per ton

See on illuminem's Data Hub™ the sustainability performance of aviation companies like Delta Airlines, United Airlines, and Air New Zealand

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