Key facts
- Japan Airlines plans to buy future carbon credits to meet CORSIA compliance obligations.
- The airline expects carbon credit prices to rise due to increased demand and limited sustainable aviation fuel (SAF) supply.
- JAL has already started purchasing and retiring credits for its 2024-2026 emissions.
- JAL and Climeworks Solutions have signed the first CORSIA-compliant carbon removal agreement.
- Climeworks will provide a portfolio of CDR pathways, including biochar and soil carbon sequestration, and DAC credits.
Japan Airlines (JAL) is preparing to purchase future carbon credits to meet its obligations under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), anticipating a surge in credit prices. The airline's vice president of sustainability and ESG promotion, Hideki Ochiai, stated that while sustainable aviation fuel (SAF) remains the long-term solution, carbon credits will play a larger role in the near future due to limited SAF supply and high costs. JAL has already begun acquiring and retiring credits for its 2024-2026 compliance period, due in January 2028.
Ochiai highlighted that understanding carbon market mechanics, including registry systems, retirement processes, project quality assessment, and pricing, has been a significant challenge. He called for greater price and market transparency to aid airlines in carbon credit procurement. The International Air Transport Association (IATA) noted that JAL is well-prepared for CORSIA, but many airlines in the region are still determining their procurement needs and strategies.
While project developers report high interest from airlines, actual transactions remain scarce. Hoang Anh Dung, founder and CEO of INTRACO Carbon, noted that traders are seeking credits below his company's breakeven price of $10 per tonne, contrasting with an expected demand of around 200 million tonnes for Phase 1 compliance against a currently eligible supply of approximately 37 million tonnes.
In a landmark move, Japan Airlines and Climeworks Solutions announced what they describe as the world's first CORSIA-compliant carbon removal agreement. Under this deal, Climeworks will provide a portfolio of carbon dioxide removal (CDR) pathways, including biochar and soil carbon sequestration, alongside direct air capture (DAC) credits, to meet ICAO CORSIA Eligible Emissions Units (EEUs) requirements. This agreement sets a precedent for the aviation industry's integration of carbon removal into compliance markets.