Carbon pricing schemes for aviation

The EU-ETS, the oldest and most efficient instrument within its scope, and CORSIA, one of the carbon-offsetting schemes, are key tools for decarbonising aviation

The European Union Emissions Trading System (EU-ETS) and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) are powerful tools in the mission for net zero. Both frameworks play critical roles in addressing aviation’s carbon emissions but operate at different levels: the EU-ETS targets emissions within the European Union, while CORSIA aims to manage global emissions from international aviation. There remains much uncertainty surrounding the compatibility of these two carbon pricing mechanisms.

Our report analyzes the potential synergies and challenges of these two mechanisms for decarbonising aviation, considering their effectiveness in reducing emissions, their geographical scope, and their impact on the industry. By exploring their alignment and potential conflicts, this report provides insight into how these systems can work together to achieve meaningful decarbonisation in the aviation sector.

Post-pandemic, carbon emissions in aviation have rebounded, nearing pre-crisis levels. Despite efforts to prevent a further decline, emissions from international flights continue to grow. However, there exist effective tools that can curb both short- and long-term carbon impacts in the sector.

EU ETS: Pricing carbon to drive sustainable aviation

The EU-ETS is a market-based mechanism that places a price on carbon emissions. Aviation was incorporated into the EU-ETS in 2012, meaning airlines operating within the EU are required to buy allowances for their carbon emissions. The system works by capping the total number of emissions and allowing airlines to buy and sell allowances, thus incentivising them to reduce emissions cost-effectively. Over time, the cap is reduced, driving down emissions and decarbonising aviation.

CORSIA: Offsetting carbon on a global scale

Carbon offset programs are an effective way to impact aviation now, not later. CORSIA, adopted by the International Civil Aviation Organisation (ICAO), is a global framework aimed at limiting the growth of carbon emissions from international aviation to 2019 levels. It requires airlines to offset their emissions by purchasing carbon credits from verified projects that reduce or remove carbon from the atmosphere. CORSIA started with a pilot phase in 2021 and is expected to ramp up over time.

Our Capgemini Invent report examines the efficiency and compatibility of these two carbon-pricing mechanisms. We believe they offer the sector substantial gains while decarbonising aviation. But it is important to understand the different levels at which the two schemes operate, which disparities exist, and where the two overlap.

Carbon pricing schemes for aviation

A report on the compatibility and efficiency of aviation carbon-pricing schemes CORSIA and the EU-ETS, including current articulations and proposed evolution.

Download the report

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Decarbonising aviation: The power of alignment and innovation 

While the EU-ETS and CORSIA are distinct systems, their complementary roles can drive meaningful decarbonisation in aviation. Moving forward, aligning their goals, enhancing global cooperation, and investing in cleaner technologies will be key to achieving a sustainable and low-carbon future for the aviation industry.