Airlines face looming carbon credit shortage

Airlines face a severe shortage of carbon credits as a new global emissions scheme takes effect. Strict rules and slow approvals restrict supplies, risking higher costs.

Xurve View
Insights:
FILE PHOTO: An airplane takes off at the Munich International Airport, in Germany, February 16, 2023. REUTERS/Leonhard Simon/File Photo

Airlines face a deficit where available carbon credits will cover only 25% of demand when the first global aviation emissions scheme takes effect. The shortfall threatens to derail compliance as carriers scramble to secure offsets ahead of mandatory deadlines. Compliance costs could reach $9 billion by 2026, forcing carriers to pay penalties or absorb steep price increases.