U.S. airlines are required to spend tens of millions of dollars in dubious carbon offsets each year under the Carbon Offsetting and Reduction Scheme for International Aviation. What happens if the Trump administration stops enforcing this requirement?
That’s what Flexport CEO Ryan Petersen expects:
I expect the US to leave the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) soon, saving US airlines tens of millions annually.
— Ryan Petersen (@typesfast) February 3, 2025
What Is CORSIA?
CORSIA isn’t a treaty, and not something to ‘pull out of’. It’s an ICAO program, and member states choose to participate. The U.S. government could decide not to implement or enforce CORSIA for flights involving U.S. carriers.
Currently, airlines monitor and report their annual international CO2 emissions, and if they exceed the average of 2019 and 2020 levels, they have to purchase carbon offsets to counter the excess. This doesn’t apply to domestic flights.
In addition to the cost of the offsets, airlines incur expenses for emissions tracking, reporting, and verification systems. And this is meant to be expensive, because it encourages investment that reduces emissions to reduce this program’s cost (e.g. fuel-efficient aircraft, alternative fuels, operational changes that reduce emissions).
Why Are The Carbon Offsets Questionable
In 2020, Delta – which flies older, less-fuel efficient planes and owns an oil refinery – claimed to be carbon neutral.
Carbon offsets not only often do not offset carbon, but can increase emissions. For instance, a non-profit may already own forest land. Its mission may be to preserve the forest, so almost by definition it won’t chop down those trees. So it sells credit for saving that forest. And a company claims to have ‘offset’ their emissions by saving these trees that were never going to be cut down to begin with. It’s like permission to pollute.
Delta used to brag about its involvement with the Kariba project in Zimbabwe. Bloomberg‘s Matt Levine calls the folks involved “ESG Consultant[s] But Evil.”
As Levine explained, “(1) the money kind of disappeared and (2) a lot of the carbon credits turned out to be fake.” The New Yorker‘s Heidi Blake has the owner of the forest generating the credits on the record, “I don’t know what you’re going to report on this, and I hope to God it’s not all of it, because I probably will go to jail.”
It turns out that they sort of made up numbers as a benchmark for how much deforestation would have happened without a forest’s preservation. There was a reference forest nearby and it basically showed not so much deforestation was happening without the preservations. So the credits weren’t really protecting forests. And they oversold the credits. Matt Levine:
The problem with this anti-deforestation project was that there was too little deforestation. That seems good? For the climate? But bad for the people hawking carbon credits. The idealistic Muench pointed out the problem, and the now-jaded Heuberger was like “meh still fine”:
Greenwashing in the extreme, but that was always the point. And virtue signaling over the environment shouldn’t take precedence over doing things that actually address environmental problems.
What Happens If The U.S. Stops Requiring These Offsets?
The first order effect is that airlines could stop buying carbon credits to offset international flights (and doing all the bureaucratic tracking needed for their reporting). That could save a given airline tens of millions of dollars each year, though there’s no consensus figure and airlines don’t separately report out these numbers.
It’s also worth noting that if the Trump administration were to simply allow for non-compliance (suspend enforcement), airlines might worry about future costs if the regulatory environment shifts – the next Democratic administration might punish the non-compliance that had been sanctioned by the Trump administration? So it’s worth considering that airlines might still maintain their record-keeping and carbon credit purchasing. That also lets them keep greenwashing, which has narrative value even if seemingly less in the current context.
The second order effect of non-compliance with CORSIA, though, is that foreign governments might impose market access limitations on airlines from countries that don’t comply. They could make compliance a requirement for flying into their country.
Could they do that under Open Skies treaties with the U.S.? Maybe. U.S. carriers could argue that applying environmental conditions they aren’t subject to at home is discriminatory, but these treaties don’t generally prohibit a country from imposing its own environmental standards on incoming traffic (provided there’s no preferential treatment for airlines in their home market). Market access restrictions as a penalty for non-compliance wouldn’t automatically constitute a violation unless the conditions clearly breach agreed non-discrimination rules.
So What Happens Next?
My hunch is that airlines aren’t clamoring for the Trump administration to suspend enforcement of CORSIA. It leads to too much uncertainty. They might even still comply in the absence of enforcement, but that could subject them to criticism from the Administration and also shareholder lawsuits they’d have to defend against.
