The International Air Transport Association (IATA) has warned that proposed changes to the European Union’s carbon-pricing regime could significantly increase the cost of international aviation, estimating that an expansion of the EU Emissions Trading System (EU ETS) could push compliance costs to €280 billion between 2027 and 2040.
The warning came as the global aviation industry marked the 10th anniversary of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), with IATA urging governments to strengthen the global framework rather than develop overlapping regional and bilateral carbon-pricing systems.
CORSIA was established through an International Civil Aviation Organisation (ICAO) Assembly resolution in 2016 as the global mechanism for addressing carbon emissions from international aviation.
More than 130 countries now participate in the scheme, while IATA estimates that CORSIA will have mitigated about 200 million tonnes of carbon dioxide emissions by the end of 2026.
From 2027, the association expects CORSIA to cover about 85 percent of global aviation emissions, reinforcing its role as the industry’s principal international framework for managing aviation-related carbon emissions.
IATA also estimates that the scheme could mobilise up to $120 billion in climate finance through the end of its operation, potentially directing significant funding towards emissions-reduction and carbon-removal projects globally.
Marie Owens Thomsen, IATA’s senior vice president, sustainability and chief economist, said continued government participation and consistent implementation would be critical to ensuring the effectiveness of CORSIA.
IATA argues that a single global framework would provide greater regulatory consistency for airlines and governments while directing investment towards emissions reductions.
The association’s call comes as the EU reviews its EU ETS, including proposals that could extend the scheme to destinations within 5,000 kilometres of the bloc.
The EU is also considering mechanisms that could allow comparable carbon-pricing arrangements to be developed with third countries.
IATA has opposed the proposed expansion, arguing that it risks creating overlapping regional and bilateral systems alongside CORSIA.
Thomas Reynaert, IATA’s senior vice president, external affairs, said the EU’s review should strengthen the global framework rather than undermine it.
According to IATA, expanding the EU ETS could increase aviation compliance costs by 40 percent to €280 billion between 2027 and 2040.
The association said the potential consequences should be assessed before the EU extends the geographical scope of its emissions system, particularly in relation to third countries, international connectivity, airline competitiveness and the continued operation of CORSIA.
IATA maintains that the development of multiple carbon-pricing systems could increase administrative and financial burdens for carriers without necessarily delivering proportional environmental benefits.
Alongside its call for a stronger CORSIA framework, IATA urged the European Union to increase support for sustainable aviation fuel (SAF) as part of efforts to decarbonise the sector.
The association called for restrictions that limit support for eligible SAF production pathways to be removed and for revenues generated through aviation-related ETS mechanisms to be directed towards SAF production, infrastructure and emerging aviation technologies.
SAF is widely regarded as one of the principal near- to medium-term tools available to airlines seeking to reduce emissions from existing aircraft fleets, particularly on routes where alternative propulsion technologies remain commercially or technically constrained.
IATA argues that carbon-pricing revenues could therefore be used to accelerate the development of the infrastructure and production capacity needed to scale up lower-emission aviation fuels.
$120bn climate finance opportunity
The aviation industry’s CORSIA debate also highlights the potential financial flows associated with international carbon markets.
IATA estimates that CORSIA could mobilise as much as $120 billion in climate finance over the life of the scheme, creating a potentially significant source of funding for emissions-reduction and carbon-removal projects.
The association said a unified international framework would allow those financial flows to support emissions reductions while reducing the risk of regulatory fragmentation.
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