How to Procure CORSIA Credits

There are many ways of sourcing CORSIA credits, each with different risk profiles. In this blog we attempt to demystify the trading lingo and help buyers asses what the right route to procurement is for them.

Alongside decisions around what to source and when best to source, companies need to decide whether they want to buy from a specific project or is the guarantee of a compliant credit sufficient. Is price the only factor or do you want to source credits from a project that helps you achieve broader ESG goals? If the answer is you want to achieve multiple SDGs through the purchase of your CORSIA credits, buying project specific credits will make more sense.

Then comes the question, should you buy spot (available today) or contract on a forward basis, if forward under what terms? When should the credits be delivered by? What if they aren't tagged in time? What if the project under performed? If buying forward, many more risks are introduced and deciding which risks you can get comfortable with are key.

Some key terms:

GENERIC CORSIA	A Seller will guarantee delivery of a CORSIA eligible credit. As a buyer you agree to accept provided the credit is CORSIA tagged.
CORSIA SPECIFIC	You procure credits from a specific project, and often a specific vintage. This means if the project fails to issue or have the CORSIA credits tagged (unable to get an LoA, or gets and LoA but fails to secure insurance/be reported in BTR), you are left short. Depending on the terms of the trade, you may or may not have pre-paid for all or a portion of the credits in exchange for a discount. Insurance might be able to protect investments in the form of pre-payments. Our team is able to assist with managing the risks through contract terms and residual risks through insurance policies.
SPOT CORSIA	Credits verified and issued/ready to be issued upon securing a buyer.
FORWARD CORSIA	Credits that are for delivery in the future. In the context of CORSIA, these are typically yet to be tagged credits, however these could be tagged credits that are simply contracted for delivery in the future. CORSIA buyers may choose to wait to take delivery in preserve cashflows, while others may want to take advantage of the discounts being offered by some sellers, for money today.
CP1	CORSIA Phase 1
OTC	Over-the-Counter. The transaction takes place directly between the two parties to the trade. An OTC arranged deal may be given up to an exchange for settlement purposes.
CP1 FUTURES	An exchange traded standardised contract for CORSIA eligible units. The exchange will guarantee payment to the Seller, and delivery of an eligible unit to the Buyer. The exchange will dictate the terms of the trade and the definition of what a CP1 eligible unit is on its exchange.

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