Answer extracted from the SmarterMarkets podcast — listen to the full episode below.
What is the current supply-demand imbalance in Corsia markets and how is it evolving?
Corsia markets have shifted dramatically from a balanced 35 million tons of supply and demand at the start of the year to roughly 200 million tons of unmet need today. This represents a scramble for carbon offset supply across the Carbon Offsetting and Reduction Scheme for International Aviation, driven by tighter regulatory requirements and rising commitments from airlines worldwide.
The Market Suddenly Out of Balance
At the beginning of 2026, Corsia appeared stable. Around 35 million tons of carbon offset demand matched approximately the same volume of supply that was already approved and ready for market. The situation felt manageable and well-matched. But this equilibrium shattered within months as new policy signals and corporate commitments created a wave of demand that regulators and markets had not anticipated.
Today, that dynamic has inverted. Airlines, facing stricter climate targets and pressure from regulators preparing for Paris Agreement compliance, have discovered a shortfall of roughly 200 million tons of carbon offsets needed to meet their obligations. This is not a gradual drift—it is a structural shock to the market. As discussed in the episode with Dirk Forrister, the scale of this gap has forced both suppliers and buyers into a race to scale production and sourcing capacity.
Why Reality Is Setting In
The root cause is simple: serious targets are now embedded in law, not left as aspirational goals. The Paris Agreement, combined with national and regional policies, has moved from rhetoric to enforcement. Airlines cannot simply miss their carbon reduction targets anymore—they must deliver real offsets, and the supply chain has not caught up.
This mismatch is forcing a reshuffling across the entire Corsia supply ecosystem. Project developers must accelerate project validation, approved offset standards must process certificates faster, and traders must locate supply from regions that have credible, auditable reduction programs. Listen to the full conversation to hear how Dirk Forrister sees these market dynamics playing out in real time.
"We want serious targets that people will stick to, that are embedded in law, that allow flexibilities so that we can really achieve the objectives of the Paris Agreement."
Dirk Forrister — President and CEO of the International Emissions Trading Association (IETA), where he has served for 14 years. Forrister has been instrumental in advocating for carbon market provisions in international climate agreements, including the Paris Agreement, and has led research projects with Harvard and other institutions on carbon pricing and market design. He is stepping down from his executive role while remaining involved as a senior advisor.
The jump from 35 million to 200 million tons reflects not just new demand, but a broader reckoning in carbon markets worldwide, as major programs revise their targets upward to meet net-zero goals. Europe is overhauling its emissions trading system, California has extended its cap-and-trade program to 2045, and financial markets are beginning to price carbon risk more seriously. Corsia is simply the aviation sector's window into this larger shift.
See also
How are California and Quebec carbon markets working together, and does this model apply to other regions?
California and Quebec operate in tandem through the Western Climate Initiative framework, where states co-designed a program after borrowing the concept from established models, creating a regional template for carbon market coordination.
What are the major policy changes occurring in the European emissions trading system and related carbon market programs?
In July, the European Commission proposed major tweaks to their main emissions trading system, and they have also established a second emissions trading system set to launch in 2028, tightening carbon requirements across the continent.
How does cultural perception of platinum versus gold influence emerging market demand for precious metals?
In Asian societies, platinum is perceived as significantly more valuable than yellow gold because it is approximately 50 times rarer, shifting demand patterns and investment flows in emerging markets.