From 2021, an increasing percentage of the carbon emission growth in international air transport will be subject to offsetting under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Presently, it is still unclear if, and how, the existing EU emissions trading scheme (ETS) for aviation will continue. We assess the environmental impacts of different options (not) to continue with the EU ETS for aviation alongside CORSIA, and also discuss resulting monitoring, reporting, and verification (MRV) requirements. Our results indicate that any form of continuation of the EU ETS would have positive environmental effects especially in the early 2020s, when the coverage and environmental impact of CORSIA, which only tackles any post-2020 emission growth in international aviation, will still be low. If, moreover, a certain failure of CORSIA Certified Emission Reductions (CERs) to actually achieve emission reduction elsewhere is assumed, the environmental net benefit of CORSIA will be even lower. From both the policy and economic perspectives, these aspects may further strengthen the need to continue with the EU ETS for aviation. Possible options are to maintain the EU ETS in operation for domestic flights only, as a complement to CORSIA, or to keep it alive even for international flights within the European Economic Area (EEA), replacing CORSIA there as an equivalent measure. Another option to increase the environmental effectiveness of CORSIA, at least to some extent, could be to voluntarily extend it to domestic EEA flights. Administrative-wise, the CORSIA MRV system could be applied to a continued EU ETS to reduce transaction costs and to assure globally similar or even identical MRV standards, e.g., with regard to exemptions and eligible fuel monitoring methods.

This paper studies the feasibility of CORSIA’s carbon neutral growth goal based on verified carbon offsetting. It is motivated by an ongoing general debate about the climate and regulatory integrity of carbon offsetting, thus systematically identifying critical carbon offset characteristics. Using registry data from the largest carbon offset verifiers eligible under CORSIA, we show that the majority of carbon offsets have minor climate integrity. This challenges CORSIA’s neutral growth objective. However, unconditional offset price differentials are only weak signals for climate integrity. To increase environmental effectiveness, a narrower scope of eligibility rules is necessary in order to ensure maximum compliance of projects and strengthen the necessary price effect of carbon offsets. However, it is highly questionable whether there is enough potential supply of offsets to ensure such high integrity, indicating that carbon offsetting should be considered as a transitory measure only.