Southeast Asia Eyes Eightfold CORSIA Carbon Credit Growth Amid Policy Gaps

CORSIA requires airlines to offset emissions growth via carbon credits. Southeast Asia could nearly triple its CEEU supply if governments authorize 54 pending projects across Vietnam, Thailand, and Myanmar. However, uneven Article 6 readiness and institutional capacity across ASEAN nations pose challenges to scaling high-quality carbon credit supply for CORSIA compliance.

Key Points

• CORSIA requires airlines to offset CO2 emissions above 85% of 2019 baseline by purchasing carbon credits (CEEUs); Asean supplies ~7% globally, mainly clean cookstoves in Cambodia and Laos, with potential to grow eightfold to 20.8 million units if governments authorize 54 pending projects across Vietnam, Thailand, and Myanmar.
• Boeing-backed report says Asean could strengthen CORSIA by expanding access to high-quality, lower-cost credits, easing rising compliance costs airlines face as credit prices tighten, while channeling climate finance regionally.
• Challenges remain: uneven Article 6 readiness and institutional capacity across Asean states, with governments cautious about overselling credits and jeopardizing their own NDC targets, limiting how quickly new supply can be authorized.

CORSIA’s Emissions Offsetting Mandate

CORSIA aims to keep international aviation’s net emissions flat by requiring airlines to offset any carbon dioxide growth above 85% of 2019 baseline levels. Airlines achieve this by purchasing and cancelling CORSIA-Eligible Emissions Units (CEEUs), each representing one tonne of CO2 reduced or removed elsewhere.

More than 130 countries participate, including seven Southeast Asian nations—Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. This creates mandatory demand for verified carbon credits, positioning the compliance market as a critical mechanism for balancing aviation’s growing environmental footprint against measurable climate action elsewhere.

Southeast Asia’s Emerging Supply Potential

Asean could become a major supplier of high-integrity carbon offsets, according to a report backed by Boeing, GenZero, and Abatable. The region already contributes roughly 7% of global CEEU supply, with 2.6 million credits issued from four clean cookstove projects in Cambodia and Laos.

This supply could grow nearly eightfold—to 20.8 million units—if governments swiftly issue Letters of Authorization (LoAs) for 54 additional qualifying projects, including 24 in Vietnam, 11 in Thailand, and 8 in Myanmar. Boeing’s Allison Melia emphasized that clear policy guidance and government-industry collaboration are essential to unlocking this potential, especially as tightening credit markets threaten to raise airlines’ compliance costs by billions of dollars in coming decades.

Institutional Gaps and Article 6 Readiness

Despite this opportunity, CORSIA implementation poses significant challenges for Asean governments. Environment ministries face the risk of “overselling” credits, potentially undermining their own Nationally Determined Contributions (NDCs) if too many units are authorized for export through corresponding adjustments under the Paris Agreement’s Article 6 framework.

Institutional readiness varies widely across the region. Singapore, Indonesia, Thailand, Vietnam, and Cambodia have adopted Article 6 frameworks, while Malaysia’s is still developing. Laos hosts CORSIA-eligible projects without a formal framework, and the Philippines and Singapore have completed a bilateral carbon deal absent a comprehensive rulebook. Brunei, Myanmar, and Timor-Leste remain in early stages, underscoring the need for stronger regional coordination and capacity-building to fully capitalize on CORSIA-driven demand.

Source : Asean poised for US$8.5bn windfall from UN-backed airline carbon scheme

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