The International Air Transport Association (IATA) is teaming up with a company to develop a carbon exchange platform where airlines, and passengers, can purchase offsets aimed at reducing the impact of air travel on the environment.
The deal with Xpansiv CBL Holding Group (XCHG), a commodity exchange company, will provide a common marketplace called Aviation Carbon Exchange for eligible emission units, the two organizations said in a joint statement on Thursday.
International airlines are counting on a global carbon offsetting plan to cap CO2 emissions from air travel at 2020 levels, mitigating the environmental impact of flying even as passenger traffic is forecast to grow.
The plan, known as Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), is the first of its kind for a single industry in response to climate change.
Carbon exchange platform
“We expect airlines from all over the world to participate,” XCHG President and Chief Operating Officer John Melby, who has worked with individual airlines and carbon markets for some time, told Reuters.
Commercial aviation is responsible for 2% of global carbon emissions and has been facing a growing backlash in Europe where a Swedish-born “flight shaming” movement has taken hold.
To achieve carbon-neutral growth after 2020, participating commercial airlines aim to substitute conventional fuel with more sustainable biofuels, but with biofuels costly and in limited supply, emissions may be offset by purchasing carbon credits from designated environmental projects around the world.
Those credits will be offered on the exchange, which enters a pilot phase in the current quarter. It will powered by XCHG’s CBL Markets with real-time data, and airlines will pay a fee for each transaction.
The International Civil Aviation Organisation, the UN agency that ratified CORSIA, will determine which offsets from different environmental projects will be offered on the exchange.
CORSIA is expected to provide more than $40 billion in funding for climate projects and offset 2.6 billion tonnes of C02 emissions between 2021 and 2035.
Commercial airlines have also sought to reduce their carbon impact by using more fuel-efficient aircraft and finding more direct flight paths through improved air traffic control.
IATA represents some 290 airlines comprising 82% of global air traffic.