The landmark Carbon Offset and Reduction Scheme for International Aviation (CORSIA) agreement, recently announced by the International Civil Aviation Organization (IACO), intends to reduce aviation-related carbon emissions beyond 2020.
The agreement intends to shrink the aviation industry’s carbon dioxide emissions through a combination of technological advances, operational improvements (such as air traffic control) and the adoption of less-polluting fuels.
In the short term, S&P Global Ratings predicts that the CORSIA agreement will have limited short-term effects on the airlines, aircraft manufacturers and airline leasing companies that it rates. However, the agreement could lead to substantially increased costs for airlines and their passengers if technological advances and alternative fuels do not prove viable. Yet the potential long-term impact may not emerge until the next decade or beyond.