Reuters reported that prices for U.S. ethanol blending credits plunged on Monday after the Environmental Protection Agency (EPA) extended a key compliance deadline and said it would rule on long-pending small refinery exemption requests by the end of August.

The move sent a shock through the U.S. biofuel credit market. Conventional ethanol Renewable Identification Numbers (D6 RINs) fell to $1.75 each, down 34 cents from Friday and their lowest level since April 15, according to Argus Media. The credits had traded as high as $2.50 on July 7.

Prices for 2026 biomass-based diesel RINs also weakened. They were last assessed at around $1.92 each, their lowest level since late April.

The sharp decline shows how closely the U.S. biofuel market depends on federal blending rules and the supply of compliance credits.

What Are RINs and Why Do They Matter?

Renewable Identification Numbers, or RINs, are tradable credits created under the U.S. Renewable Fuel Standard (RFS).

The RFS requires obligated fuel companies, mainly refiners and importers, to demonstrate that they have met federal renewable fuel blending requirements. Companies can generate RINs by blending eligible biofuels into the fuel supply or buy credits from other market participants.

RINs therefore create a financial value around renewable fuel use.

When refiners need more credits than they can generate through their own blending activities, they must buy RINs. Higher compliance obligations or tighter credit supplies can push prices higher.

The opposite can also happen.

If the EPA grants exemptions that reduce the number of RINs refiners need, the market can suddenly have more credits available. That is what traders are now anticipating.

US Biofuel Market Remains Large

The United States is the world’s largest producer and consumer of fuel ethanol and one of the biggest markets for biodiesel and renewable diesel.

Corn-based ethanol dominates the U.S. biofuel market. Most gasoline sold in the country contains some ethanol, with E10, a blend containing about 10% ethanol, forming the backbone of the market.

Higher ethanol blends such as E15 and E85 also contribute to demand, although their use remains much smaller.

The U.S. ethanol industry produces billions of gallons of fuel each year. That creates a large and established market for corn, ethanol production, transportation, blending and RIN generation.

The diesel side of the market has also expanded. Biodiesel and renewable diesel provide another major source of renewable fuel and compliance credits.

Renewable diesel is particularly important because it can be used in existing diesel infrastructure and is increasingly produced from feedstocks such as vegetable oils, animal fats and used cooking oil.

• MUST READ: U.S. Biofuel Market 2026: Can EPA Policies Offset War-Driven Volatility? 

Demand for Biofuel Credits Is Driven by Federal Rules

The biggest source of demand for RINs is not simply fuel consumption. It is the federal compliance system.

Each year, the EPA establishes Renewable Volume Obligations (RVOs) that determine how much renewable fuel the market must account for.

Refiners and fuel importers receive obligations based on their share of the U.S. transportation fuel market. They then need enough RINs to demonstrate compliance.

That makes RIN demand closely tied to EPA policy.

The EPA recently finalized record-high renewable fuel blending requirements for 2026 and 2027. Those requirements have increased compliance pressure on refiners and helped support RIN prices.

But the market is now facing a potential reversal.

EPA Exemptions Could Add Billions of Credits

The EPA is reviewing 34 small refinery exemption petitions, with some dating back to July 2024.

Small refinery exemptions allow qualifying facilities to receive relief from their renewable fuel obligations when they can demonstrate that compliance would impose disproportionate economic hardship.

The market expects the EPA’s decisions to free up a significant number of RINs.

Representatives from the refining and ethanol industries, along with an analyst, estimate that the exemptions could free between 1.2 billion and 1.8 billion RINs for small refiners to use toward their 2025 compliance obligations.

The EPA had previously indicated that it could reallocate about 990 million RINs associated with exemptions. This potential supply is large enough to materially change the balance between RIN supply and demand.

Why RIN Prices Fell So Quickly

The selloff is largely about expectations.

Jessica Dell, head of U.S. biofuel pricing at Argus Media, said RIN prices lost substantial value during Monday’s session as the market reacted to the pending exemption decisions.

RIN prices had already fallen 5% on Friday. The EPA’s decision to extend the September 1 compliance deadline has added another layer of uncertainty.

Under the RFS, refiners must show that they met their 2025 biofuel blending obligations by September 1. They can do this by generating RINs through renewable fuel blending or purchasing credits from other market participants.

Giving refiners more time to comply could reduce immediate buying pressure.

More importantly, the deadline extension has been interpreted by some market participants as a possible signal that refiners could receive broader relief from their 2026 and 2027 obligations.

Agricultural economist Scott Irwin of the University of Illinois described the move as potentially signaling some form of “RIN relief” for future obligations.

Ethanol Producers Face a Different Equation

Lower RIN prices are not necessarily positive for the ethanol industry. Ethanol producers can generate RINs when they blend their fuel into the transportation system. Those credits provide an additional source of revenue.

When RIN prices fall, the value of that revenue stream also declines.

That can put pressure on producer margins, particularly when corn prices, energy costs, transportation expenses or other operating costs are high. Furthermore, the impact can vary across producers because ethanol economics depend on several factors, including corn prices, ethanol selling prices, distillers grains revenue and energy costs.

Still, the RIN market remains an important part of the broader economics of U.S. ethanol production.

Supply Could Become the Market’s Biggest Concern

The immediate question is how many credits will become available if the EPA grants the pending exemptions.

• A release of 1.2 billion to 1.8 billion RINs would represent a significant addition to the pool of credits available for compliance. This could create a supply overhang and keep prices under pressure.

It could also reduce the incentive for some refiners to purchase additional credits in the spot market.

For the ethanol industry, this creates a difficult environment. Demand for renewable fuel may remain strong, but the value of the compliance credits attached to that fuel can fall when regulatory relief increases RIN availability.

What Happens Next?

The EPA’s decisions on the 34 exemption petitions will be the next major catalyst for the market. If the agency grants a large number of exemptions, RIN prices could face additional pressure as more credits become available or obligations are reduced.

On the other hand, if fewer exemptions are granted, the market could tighten again, particularly given the record renewable fuel requirements for 2026 and 2027.

The outcome will also influence the economics of U.S. refiners and biofuel producers.

For refiners, lower RIN prices can reduce the cost of meeting federal obligations. For ethanol and renewable diesel producers, however, weaker credit prices can reduce the value of an important revenue stream.

The episode highlights a central feature of the U.S. biofuel market: fuel demand, government mandates and carbon-related compliance markets are closely connected.

The U.S. can continue consuming large volumes of ethanol, biodiesel and renewable diesel while RIN prices fall sharply if regulatory changes increase credit supply.

For carbon and clean energy investors, the RIN market is therefore worth watching alongside traditional biofuel production data. Changes in EPA policy can quickly reshape the economics of renewable fuels, alter demand for compliance credits and influence investment decisions across the U.S. bioenergy sector.

• ALSO READ: US Biofuels Get Big Boost: USDA Invests $537M to Power America’s Clean Energy Future 

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Germany has revoked carbon credits linked to 30 projects in China after authorities found serious concerns about the emissions reductions they claimed to deliver. The action has also affected ExxonMobil, which bought credits from one of the projects now under scrutiny.

The projects claimed a combined 2.1 million tonnes of CO2 reductions. One project backed by an ExxonMobil unit claimed nearly 96,000 tonnes of reductions, with the credits priced at about €44 per tonne. That puts the reported value at roughly €4.2 million.

The case highlights a wider problem for carbon credit markets. Even credits used in a government-backed compliance system can face questions over whether the promised emissions cuts actually happened.

Germany Finds Problems With Chinese Carbon Projects

The revoked credits came from upstream emissions reduction (UER) projects. These projects aim to cut emissions before crude oil reaches a refinery, such as by capturing gas that would otherwise be flared during oil production.

Germany allowed companies to use UER certificates to help meet their fuel emissions obligations. The system attracted interest because it offered a relatively low-cost way to reduce reported emissions.

However, German authorities began finding serious problems in several projects.

In September 2024, the German Environment Agency (UBA) announced it blocked certificates for 215,000 tonnes of CO2 from eight projects. Seven project applications were withdrawn after UBA identified serious legal and technical inconsistencies. In another Chinese project, UBA rejected certificates after finding that the project had started too early.

The agency also said it was investigating additional projects and had asked project operators to allow on-site inspections. The latest action goes much further, with authorities withdrawing credits from 30 Chinese projects.

ExxonMobil’s 96,000 Tonnes of Credits Under the Microscope

A Belgian ExxonMobil entity supported one of the projects, as stated in a German Environment Agency report, per a Bloomberg report. The project claimed to reduce nearly 96,000 tonnes of CO2. The credits sold for about €44 per tonne, putting their reported value at approximately €4.2 million.

ExxonMobil told Bloomberg that it operates in line with legal requirements and generally does not comment on ongoing investigations. The company’s involvement does not mean the oil giant has been accused of creating false emissions reductions itself.

The German investigation focuses on the projects and the claims behind the credits. This distinction is crucial. Companies can purchase credits in good faith and still face losses if authorities later invalidate them.

30 Projects, 2.1M Tonnes and Growing Questions

The 30 projects together claimed about 2.1 million tonnes of emissions reductions. That is roughly equivalent to the annual emissions from 500,000 cars, according to reporting on the German findings.

The investigation originally identified 45 projects as suspicious. Authorities have now withdrawn credits from 30 of them. However, the full picture is still developing.

Germany’s report names only six projects, while information on 24 projects remains redacted because investigations are still underway. The revocation decisions for the six named projects are final, according to Bloomberg’s reporting. This means it would be too early to describe every project in the wider investigation as fraudulent.

German authorities found enough issues to revoke credits from 30 projects. They are still investigating other cases.

Beijing Karbon Faces Scrutiny

The investigation also points to Beijing Karbon, a Chinese consultancy involved in many of the projects. According to the German report, Beijing Karbon was the main developer behind the 45 projects under investigation.

The report alleges that the company created the appearance of legitimate UER projects through deception. The case also raises questions about third-party verification.

Bloomberg reported that European auditing firms, like TÜV Rheinland, Müller-BBM Cert, and Verico SCE, checked some of the projects. This creates a bigger concern for carbon markets. Verification should offer an independent check that a project has achieved its claimed emissions reductions.

• If questionable projects get through many layers of development and checks, buyers may struggle to assess credit quality.

Germany Tightens the Rules After the Credit Scandal

The scandal has already changed Germany’s approach to these credits. In 2024, UBA found that remote checks, satellite images, and document reviews often didn’t fully catch misuse. The agency brought in an international law firm to support its investigations in China.

The agency also said it would continue reviewing other critical UER projects worldwide.

The German government has since moved to end the use of UER certificates for the country’s fuel emissions quota. Under the updated rules, recognition of these certificates was allowed only through 2025. That makes the current revocations part of a broader shift away from the system.

For carbon market participants, the episode shows how quickly regulatory decisions can change the value of credits that once qualified for compliance.

When a Carbon Credit Loses Its Climate Value

Carbon credits only have environmental value if they represent real emissions reductions. A company can use a credit to claim that one tonne of emissions was reduced, avoided or removed elsewhere. But if the underlying project did not deliver that reduction, the climate benefit disappears.

That creates a serious problem for buyers.

A credit may pass project reviews, receive third-party verification and enter a regulated market. Years later, a regulator can still discover problems and withdraw it.

Germany’s action shows that regulatory approval is not necessarily a permanent guarantee of credit quality. It shows why strong monitoring and on-site checks are important. This is especially true for projects in countries or sectors with limited oversight from authorities.

Invalid Credits Can Leave Buyers With a Bigger Bill

The financial impact extends beyond the original purchase price. When authorities revoke credits used for compliance, companies may need to obtain replacement units to meet their emissions obligations.

That can create an additional cost if valid credits are more expensive than the original ones.

For ExxonMobil, the reported €4.2 million value of the affected project provides a measure of the potential exposure tied to that one project. The overall financial impact depends on how many credits the company bought, used, or held. It also depends on the replacement obligations that apply.

The issue is therefore larger than the value of one transaction. Credit quality risk can turn into a financial risk for companies relying on carbon markets to meet regulations.

A Warning for the Wider Carbon Market

Germany’s move tests carbon market integrity. This comes as governments boost carbon pricing and international emissions trading.

The EU’s Emissions Trading System (ETS) covers more than 10,000 installations across the power, industrial and aviation sectors. Since 2005, it has helped reduce emissions from covered installations by about 50%, says the European Environment Agency.

That progress depends partly on confidence in the rules and measurement systems behind carbon markets. The ExxonMobil case shows what can happen when that confidence breaks down.

For project developers, stronger monitoring and verification will become increasingly important. For buyers, the episode is a reminder to look beyond the price and label attached to a credit.

And for regulators, it shows that removing questionable credits after they enter the market is not enough. Stronger checks are needed before credits reach buyers in the first place.

Germany’s investigation is still developing, with 24 of the 30 projects remaining under investigation. Still, the revocations already send a clear message: carbon credits must represent real emissions reductions, or their market value can disappear.

• READ MORE: CCP-Labelled Carbon Credits Jump to 13% as Buyers Willing to Pay More for Quality

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EU Carbon Prices May Push Bitcoin Mining Toward Russia, Study Finds

A new study suggests that higher European Union carbon prices may be linked to more Bitcoin mining activity in Russia, raising concerns about carbon leakage from Europe’s climate policies.

The study, “Does Carbon Pricing Displace Crypto-Mining Emissions? Quantile Evidence on Carbon Leakage from EU27, Russian and Rest-of-World Power Grids,” was submitted to MDPI. Researchers analyzed daily data from January 2019 to January 2026.

The researchers found a significant link between Bitcoin returns, EU carbon allowance returns, and Russian power sector emissions. They say the result is consistent with mining activity shifting toward Russia when Bitcoin prices and EU carbon prices rise.

However, the study does not prove that mining machines physically moved from Europe to Russia. The authors say miners with equipment in both markets could instead switch machines on or off depending on which location offers better returns.

That distinction is important for carbon credit market policy.

How EU Carbon Pricing Can Affect Bitcoin Mining

The EU’s Emissions Trading System (ETS) puts a price on greenhouse gas emissions from covered sectors. Companies generally need one allowance for each tonne of CO2 they emit.

Carbon costs can affect electricity prices, especially where fossil fuel power plants set wholesale prices. That matters for Bitcoin miners because electricity is one of their highest operating costs.

Bitcoin uses a proof-of-work system. Miners run specialized computers to process transactions and secure the network. When electricity becomes more expensive, mining becomes less profitable, but higher Bitcoin prices can improve mining returns.

The new study examines what happens when these two factors work together with EU carbon prices.

What the Study Found

The researchers used 2,550 daily observations covering January 2019 through January 2026. They compared power sector CO2 emissions in the EU27, Russia, and the rest of the world with Bitcoin returns and EU carbon allowance returns.

Russia showed the strongest result.

The interaction between Bitcoin returns and EU carbon allowance returns was positive and statistically significant in Russia’s lower emissions range, with a beta of 0.066 and a p-value of 0.001.

The relationship also remained significant under other tests. The study reports p = 0.012 using ordinary least squares with robust errors and p = 0.010 in a dynamic model that accounts for past emissions. Russia was the only region where the overall model was jointly significant.

The same relationship did not appear consistently in the EU27 or the rest of the world.

The researchers say the Russian effect emerged mainly after 2020, around the time of China’s crackdown on Bitcoin mining and a sharp rise in European carbon allowance prices.

Russia Could Offer Lower Mining Costs

The study points to Russia as a possible destination because it does not have an EU-style carbon pricing system.

For miners, that can create a cost difference. If carbon costs push up electricity prices in Europe while Bitcoin prices remain attractive, miners may have an incentive to use equipment in locations with lower power costs.

The researchers suggest that some companies could hold mining hardware in both regions and change where they run the machines. This would look like a migration in the data even if no physical equipment crossed the border.

The study therefore describes the result as possible operational carbon leakage. Carbon leakage occurs when climate policies reduce emissions in one place but cause some activity and emissions to move elsewhere.

Russia’s Mining Rules Could Limit the Shift

Russia’s position is not as simple as offering cheaper power. The country introduced a legal framework for cryptocurrency mining in 2024. It has also restricted mining in regions facing electricity shortages.

The restrictions became important from 2025, when Russia banned mining in several areas and introduced seasonal limits in others. Further restrictions could make it harder for miners to relocate operations to Russia solely to avoid higher energy costs.

The study also recognizes these limits. It notes that Russia’s changing mining rules could reduce operators’ ability to shift activity between countries.

This means carbon pricing is only one part of the mining location decision. Electricity prices, regulations, hardware efficiency, and access to the grid also matter.

Bitcoin Prices Can Change the Equation

Bitcoin’s price is another major part of the equation. When Bitcoin becomes more valuable, miners can potentially earn more from the same amount of computing power. That can make higher electricity costs easier to absorb.

Bitcoin has remained highly volatile in 2026, making mining economics change quickly. This is why the study looks at Bitcoin returns rather than Bitcoin’s price alone. It tests whether changes in Bitcoin profitability interact with changes in European carbon prices and power sector emissions.

The research does not say carbon pricing alone causes mining to move. Instead, it finds a statistical relationship that becomes stronger when Bitcoin returns and EU carbon allowance returns rise together.

• RELEVANT: WULF Stock Climbs on $31 Target as TeraWulf Bets Big on Low-Carbon, Nuclear-Powered Bitcoin Mining

Crypto’s Power Footprint Raises the Stakes

The issue matters because Bitcoin mining consumes large amounts of electricity.

The International Monetary Fund (IMF) has sharply increased its estimates on the environmental footprint of digital technology. When combining crypto mining with Artificial Intelligence (AI) data centers, their collective electricity consumption has surged to 2% of global electricity.

This combined power demand is now equivalent to the entire power grid of Japan, the world’s fifth-largest energy user.

Individually, crypto mining remains a major source of pollution. The IMF projects that crypto mining alone will account for 0.7% of global carbon dioxide emissions by 2027. This is a dramatic increase from the 0.33% estimated back in 2022.

To help curb these rising emissions, the IMF proposes a targeted electricity tax of $0.047 per kilowatt-hour on crypto mining operations worldwide. Including local air pollution costs would raise the figure to about $0.089 per kWh.

These estimates show why electricity and carbon costs can have a major effect on mining economics.

They also explain the policy concern. If carbon pricing makes mining more expensive in one market but miners simply increase activity in a less regulated market, global emissions may not fall as much as expected.

The Study Comes With Important Caveats

The findings should not be treated as proof that EU carbon prices directly caused Bitcoin miners to move to Russia. The paper is currently a preprint, not a final peer-reviewed study. More importantly, the researchers did not track individual mining companies or physical mining equipment.

The study also notes that China’s May 2021 Bitcoin mining ban disrupted the relationship between mining activity and emissions. Other factors affecting Russian power sector emissions are not fully captured by the model.

These limits make the results better viewed as evidence of a possible link rather than a definitive cause-and-effect finding. Still, the Russia result is notable because the same relationship did not appear in the EU27 or the rest of the world.

Could Bitcoin Become a New Carbon Leakage Test?

The findings raise a wider question for carbon markets. Carbon pricing aims to make pollution more expensive and encourage cleaner energy.

The EU ETS has helped drive large emissions reductions in covered sectors. However, mobile activities such as Bitcoin mining can respond quickly to changes in electricity costs.

That makes Bitcoin different from industries such as steel or cement, where moving an entire production plant is costly and slow.

For policymakers, the challenge is therefore not only reducing emissions inside a carbon pricing system. It is also limiting the risk that energy-intensive activity shifts to markets with weaker climate rules.

The new study does not prove that EU carbon pricing is pushing Bitcoin miners into Russia. Yet, it provides statistical evidence consistent with that possibility.

As Bitcoin prices, mining technology and carbon costs continue to change, the issue could become more important for policymakers trying to cut emissions without simply moving them across borders.

• READ MORE: Top 5 Sustainable Bitcoin Mining Companies To Watch Out For

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Aviation is entering a new phase in its efforts to cut carbon emissions. As air travel grows, airlines face pressure to reduce emissions while meeting the demands of long-distance flight. Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and sustainable aviation fuel (SAF) are becoming key tools, creating new policies, markets, and investment opportunities across the aviation industry.

This guide explains how CORSIA works, how SAF fits into aviation’s decarbonization strategy, and where the market is headed. It covers CORSIA rules and timelines, eligible carbon credits and fuels, SAF production pathways, market trends, costs, policy drivers, and the supply gap the industry must close to reach net zero.

CORSIA and SAF: Why Aviation Needs a New Decarbonization Strategy 

Aviation is one of the harder sectors to decarbonize. Aircraft need energy-dense fuels that can support long flights without adding excessive weight. Unlike cars, most commercial aircraft cannot yet switch to large battery systems at scale.

Aviation produces about 2.5% of global human-caused CO₂ emissions, according to the International Air Transport Association (IATA). Its wider climate impact also includes non-CO₂ effects such as contrails and nitrogen oxide emissions.

This makes aviation’s transition more complex than simply replacing fossil fuels with electricity. More efficient aircraft, improved flight operations and new propulsion systems can all reduce emissions. However, sustainable aviation fuel could play a major role in the near term.

SAF can be produced from feedstocks such as used cooking oil, agricultural waste and other renewable materials. It can also be used in existing aircraft as a drop-in fuel, allowing airlines to reduce lifecycle emissions without replacing their fleets. IATA estimates SAF could provide about 65% of the emissions reductions needed for aviation to reach net-zero CO₂ emissions by 2050.

SAF is not the only solution. CORSIA, ICAO’s global market-based measure for international aviation, addresses emissions that remain after other reduction measures. Together, SAF and CORSIA form two important parts of aviation’s broader path toward net zero.

What Is CORSIA? 

CORSIA is a global system created by the International Civil Aviation Organization (ICAO) to address the growth of CO₂ emissions from international aviation. It works alongside cleaner fuels, aircraft efficiency, and improved flight operations.

CORSIA’s offsetting requirements apply to eligible international flights between participating states. Domestic aviation is outside the scheme’s offsetting system. Airlines covered by CORSIA must also monitor, report, and verify their emissions under the program’s MRV requirements.

For 2024–2035, CORSIA uses a baseline equal to 85% of 2019 emissions. When an airline has an offsetting requirement, it must cancel eligible emissions units to cover the required amount.

CORSIA is therefore different from a conventional carbon tax. It creates a framework for managing specific international aviation emissions through approved emissions units.

The scheme also recognizes the emissions benefits of CORSIA Eligible Fuels, including qualifying SAF. This creates an important link between aviation fuel markets and carbon markets.

• In simple terms, SAF helps reduce aviation’s emissions, while CORSIA provides a framework for addressing some emissions that remain.

CORSIA Timeline: From Pilot Phase to Full Implementation

CORSIA was adopted by ICAO in 2016 and is being introduced in stages. This phased approach gives airlines, governments, and carbon-market participants time to build the systems needed for monitoring emissions and meeting offsetting requirements.

The Pilot Phase ran from 2021 to 2023. During this period, participation was voluntary, allowing countries and airlines to gain experience with CORSIA’s monitoring, reporting, and verification requirements.

The First Phase covers 2024 to 2026, with states participating voluntarily. However, airlines operating on routes between participating states can still be subject to CORSIA offsetting requirements. This is the phase CORSIA is currently in.

The Second Phase will run from 2027 to 2035. Participation becomes broader, although ICAO provides exemptions for certain states based on factors such as their level of international aviation activity and development status.

As of 2026, 130 states participate voluntarily in CORSIA. ICAO lists 134 participating states from 2027, when the Second Phase begins. Together, these phases are designed to expand the system while giving countries time to establish the necessary regulatory and reporting frameworks.

Beyond 2035, CORSIA will continue to operate as part of ICAO’s wider strategy for achieving net-zero carbon emissions from international aviation by 2050.

How CORSIA Calculates Airline Offset Requirements

CORSIA does not require airlines to offset all of their international aviation emissions. Instead, it focuses on emissions above a set baseline.

• From 2024 to 2032, the system mainly uses the growth of international aviation as a whole (100%). This is called the sectoral approach. It means an airline’s offset requirement is linked to the industry’s overall emissions growth, rather than only its own growth.
• From 2033 to 2035, the calculation will use both industry-wide and airline-specific emissions growth. The sectoral share will be 85%, while the airline-specific share will be 15%.

Airlines can also reduce their CORSIA obligation by using CORSIA Eligible Fuels, including qualifying SAF. They must provide records showing the amount of fuel used and its emissions savings.

This gives airlines two main ways to lower their CORSIA costs:

1. reduce emissions, and
2. use eligible lower-carbon fuels.

CORSIA Carbon Credits: What Can Airlines Use?

Airlines with a CORSIA offsetting requirement must cancel approved CORSIA Eligible Emissions Units (carbon credits) to cover it. These are not the same as any carbon credits sold in the voluntary carbon market. ICAO has a specific approval process for carbon credit programs that want to supply units for CORSIA.

The organization checks programs against rules covering areas such as additionality, monitoring, verification, and double counting. These rules are designed to make sure the claimed emissions reductions are real and properly tracked.

ICAO updates its list of eligible programs and units over time. As of April 2026, the framework includes programs such as the American Carbon Registry, Climate Action Reserve, Gold Standard, Isometric, and Verra’s Verified Carbon Standard, subject to specific eligibility conditions.

Importantly, being part of an approved program does not mean every credit from that program can be used under CORSIA. Eligibility can depend on factors such as the credit type, vintage, compliance period, and additional authorization requirements.

This has created a potential supply problem…

A July 2026 analysis from Sylvera estimates that CORSIA could create demand for about 163 million eligible emissions units (EEUs) during its first compliance phase, rising to 198 million credits under full implementation. Yet only about 38 million credits currently qualify, covering just 23% of expected first-phase demand. This creates a potential 125 million-credit supply gap.

The problem is not a lack of issued credits. About 300 million credits have been issued. However, many can’t qualify for CORSIA. They lack the necessary host-country Letters of Authorization or Corresponding Adjustments under Article 6 of the Paris Agreement.

By January 2028, the eligible supply might hit 640 million credits. However, Sylvera estimates that only about 104 million could be eligible due to authorization risks. Just 48 million are fully confirmed.

Airline purchases also remain limited. Only around 400,000 tonnes of CORSIA credits had been retired, equal to about 0.2% of expected first-phase demand. Delayed buying could create a rush for eligible credits as compliance deadlines approach.

That shortage could push prices higher. Sylvera’s modeling puts first-phase credit prices at about $15 per tonne in a low case, $33 in a base case, and $53 in a high case by January 2028.

The long-term cost could be much larger. An MSCI Carbon Markets analysis shows that if supply tightens, CORSIA compliance costs might hit $127 billion from 2024 to 2035. By 2035, eligible credit prices could reach nearly $100 per tonne. Estimated exposure includes about $8 billion for Emirates, $6 billion for Qatar Airways, and $5 billion for United Airlines.

These figures show why CORSIA is becoming a distinct carbon market. The challenge is not simply finding credits, but securing enough high-quality, authorized units that meet CORSIA’s eligibility rules.

• SEE MORE: Airlines Face a $127 Billion Carbon Credit Bill as CORSIA Supply Tightens

What Is Sustainable Aviation Fuel (SAF)?

Sustainable aviation fuel is aviation fuel made from renewable or waste-based materials. It is designed to replace part of the fossil jet fuel used by aircraft while producing lower emissions over its full lifecycle.

SAF can be made from feedstocks such as used cooking oil, animal fats, crop residues, forestry waste, and other biomass. Newer pathways can also use renewable electricity, hydrogen, and captured carbon to make synthetic fuels.

One of SAF’s main advantages is that it can work with today’s aircraft and fuel systems. Airlines can use approved SAF by blending it with conventional jet fuel, without replacing their existing fleets.

However, SAF is not automatically low-carbon. Its climate benefits depend on the feedstock, production method, energy source, and land-use impacts. CORSIA therefore uses lifecycle emissions to measure the climate performance of eligible fuels.

SAF also remains a very small part of the global fuel market. IATA expects global SAF production to reach about 2.4 million tonnes in 2026, equal to only 0.8% of total jet fuel use. But it must increase tremendously to 449 million tonnes by 2050 for net-zero aviation.

This large gap between current supply and future demand is one of the biggest challenges facing aviation’s net-zero plans.

SAF Feedstocks and Production Technologies: How SAF is Made

SAF can be made from many different materials. The choice of feedstock affects the fuel’s cost, emissions, and ability to scale.

Today, some of the main feedstocks include used cooking oil, animal fats, agricultural residues, forestry waste, and other forms of biomass. Waste and residue feedstocks are attractive because they can avoid some of the land and food concerns linked to conventional crops. ICAO groups SAF feedstocks into categories such as primary products, by-products, wastes and residues.

Several technologies can turn these materials into jet fuel. One of the most widely used is HEFA, which processes oils and fats with hydrogen. Other pathways include Fischer-Tropsch (FT), which can turn biomass or other carbon sources into fuel, and alcohol-to-jet (ATJ), which converts alcohols such as ethanol into aviation fuel.

Another emerging option is e-SAF, also called power-to-liquid fuel. It uses renewable electricity, hydrogen, and captured carbon to produce synthetic aviation fuel. This could greatly expand SAF supply because it is less dependent on biomass.

However, each pathway faces challenges. Waste feedstocks are limited, while newer technologies are still expensive and need more production capacity.

• This creates a key issue for the SAF market: the aviation industry needs much more fuel, but sustainable feedstocks and production capacity remain limited.

What Makes SAF Eligible Under CORSIA?

Not all SAF automatically qualifies under CORSIA. To receive CORSIA benefits, the fuel must meet ICAO sustainability rules and come from a producer certified under an ICAO-approved sustainability certification scheme.

One key requirement is emissions performance. CORSIA SAF produced from 2024 onward must achieve at least a 10% reduction in lifecycle greenhouse gas emissions compared with the baseline aviation fuel.

ICAO also considers factors such as land use, carbon stocks and the sustainability of the feedstock. This helps prevent fuels with poor environmental performance from receiving CORSIA benefits.

The system measures emissions across the fuel’s full lifecycle. This can include feedstock production, processing, transport, fuel production and aircraft use. It can also account for emissions linked to land-use change.

For airlines, this matters because qualifying SAF can lower their CORSIA offsetting requirement. The fuel must be properly certified, and its emissions savings must be supported by the required records. This creates a strong link between SAF production, sustainability certification, and the aviation carbon market.

ICAO’s CORSIA Eligible Fuels page was updated in June 2026. It now lists the Fourth Edition of the CORSIA Approved Sustainability Certification Schemes, and on June 22, 2026, ICAO approved Bonsucro as a new CORSIA-approved sustainability certification scheme.

The SAF Supply Gap: From 2.4M Tonnes to 500M

The biggest question for SAF is whether production can grow fast enough to meet future demand. As mentioned, IATA expects global SAF production to reach only 2.4 million tonnes in 2026. Yet, its net-zero pathway points to millions of tonnes of SAF per year by 2050.

• That means production must increase by more than 200 times from today’s level.

The challenge is not only building more SAF plants. The industry also needs enough sustainable feedstock, hydrogen, renewable power, refining capacity, and transport infrastructure.

Waste oils and fats are useful today, but their supply is limited. Other options, such as agricultural and forestry waste, could provide more fuel but require large collection and processing networks.

E-SAF could eventually reduce some feedstock limits by using renewable electricity, hydrogen and captured carbon. But the technology remains expensive and needs much more clean power.

The 2030s will therefore be critical. Governments will need stronger policies, while airlines and fuel producers will need to commit more capital.

If production grows slowly, SAF could remain a scarce and expensive fuel. If investment and technology scale quickly, it could become a much larger part of the global aviation fuel market.

• RELEVANT: SAF Crisis Deepens: IATA Says Aviation’s Net Zero Goal Is at Risk, but Brazil Offers New Hope

What Could Slow CORSIA and SAF Growth?

CORSIA and SAF face different challenges, but they are connected by the same goal: reducing aviation’s climate impact.

• For CORSIA, one challenge is coverage. The system applies to international aviation, while domestic flights are outside its offsetting system. Its impact also depends on how many states participate and how effectively airlines follow the rules.
• SAF faces a larger physical challenge. There is simply not enough low-carbon fuel available today. Production must grow much faster, while sustainable feedstocks remain limited.
• Cost is another major barrier. Airlines operate in a price-sensitive industry, so buying large amounts of expensive SAF can be difficult without policy support or customer demand.
• There is also a need for clear sustainability rules. SAF should deliver real emissions cuts without causing major damage through land-use change or other environmental impacts.

These challenges do not mean SAF or CORSIA will fail. They show why aviation needs a mix of solutions rather than relying on one technology or policy.

Conclusion: CORSIA and SAF Have Different Jobs

CORSIA and SAF are becoming important parts of aviation’s climate strategy, but they serve different purposes.

SAF tackles emissions at the fuel level. CORSIA helps address emissions that remain from international aviation. Together, they support a wider strategy that also includes better aircraft, more efficient operations and new technologies.

Closing the huge SAF production gap will require more than airline demand. Governments will need effective policies, producers will need major investment, and the industry will need new technologies and sustainable feedstocks.

CORSIA will also continue to evolve as its Second Phase begins in 2027. ICAO’s current framework already includes rules for eligible carbon units and fuels, giving the aviation industry a common system for managing international emissions.

The long-term outcome will depend on how quickly these systems can scale. For now, one point is clear: aviation’s path to net zero will depend heavily on making cleaner fuels available at much greater scale while strengthening the global rules that support emissions reductions.

• FURTHER READING: ASEAN Could Unlock an $8.5 Billion Carbon Market Opportunity Through CORSIA

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