India's CORSIA Entry Could Add 140 Million Tonnes to Offset Demand

India's entry into the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) could add 140 million tonnes of CO2 to global offsetting obligations between 2027 and 2035, according to consulting firm ICF. The figure equals roughly 10% of projected global CORSIA obligations over the period. It lands in a market where eligible credit supply already falls far short of airline demand, putting pressure on prices for authorised units.

Foreign carriers, not Indian airlines, will carry most of the new obligation. ICF expects airlines operating qualifying international routes connected to India to account for approximately 65% of the additional demand. Indian airlines face estimated obligations of 35 million to 49 million tonnes over the same window.

How tight is the eligible credit supply?

The imbalance between demand and supply defines the market. In September, the International Air Transport Association (IATA) estimated that carriers will need 200 million to 250 million eligible emissions units by January 2028. As of August, approximately 72 million units were covered by compatible host-country authorisations.

That gap — roughly 130 million to 180 million units — sits at the centre of every price forecast for the compliance period. Credits meeting CORSIA requirements, particularly those carrying the necessary government authorisations, could command stronger prices as airlines compete for a limited pool.

Scarcity alone does not guarantee a rally. On October 7, Platts assessed Phase 1 CORSIA credits at $12.75 per tonne. S&P Global launched separate Phase 2 price assessments on November 2, reflecting the market's transition into the next compliance period. Government authorisations and new supply will determine the market's direction more than headline demand growth.

What drives India's long-term demand growth?

India's aviation expansion reinforces the demand outlook well beyond the initial compliance period. The International Council on Clean Transportation (ICCT) estimates that Indian carriers transported more than 170 million passengers in 2024. The country's airlines have ordered approximately 1,000 aircraft for delivery over the next decade to 15 years.

ICCT projects Indian airlines' cumulative CORSIA obligations at 31.8 million tonnes between 2027 and 2035. Compliance costs depend heavily on how the supply side develops. Under sufficient credit supply conditions, ICCT puts those costs at $781 million. If supply remains constrained, the bill could rise to approximately $2.6 billion — more than three times the baseline figure.

The spread between those two outcomes illustrates the stakes for both airlines and credit developers. A constrained market transfers cost to carriers. A well-authorised supply base keeps compliance affordable and channels capital into new reduction projects.

What decides what happens next?

India's entry adds another layer of demand to a market where access to authorised credits, rather than the generation of new carbon reductions, remains the critical bottleneck. Host-country governments control the pace at which eligible supply reaches the market through their authorisation processes.

The milestones to watch are concrete. Governments must accelerate authorisations of eligible emissions units before airlines face the January 2028 deadline identified by IATA. Price assessments for Phase 2 credits, now published separately by S&P Global, will show whether the projected squeeze materialises in traded values.

For the carbon credit market, India's participation converts a long-discussed demand scenario into scheduled compliance obligations with fixed dates. The 140 million tonnes question is whether authorised supply can scale in time.