CORSIA offset rules for airlines

Summary#

This Canada Gazette notice sets out the proposed Regulations Amending the Canadian Aviation Regulations (Parts I and X — Offsetting of CO2 Emissions — CORSIA). It would make Canadian airlines that fly internationally buy or cancel carbon offsets or use lower‑carbon aviation fuels to cover growth in international CO2 emissions. The rules would come into force on January 1, 2021 and apply through 2021 to 2035.

What it does#

• Implements the International Civil Aviation Organization’s (ICAO) global offsetting system, known as CORSIA, inside Canadian law.
• Requires affected operators to acquire and cancel CORSIA‑eligible emissions units (carbon credits) to cover their share of any increase in international CO2 above the 2020 baseline.
• Allows operators to reduce their offset needs by using CORSIA eligible fuels (CEF) that have a verified life‑cycle emissions reduction (at least 10% lower than conventional jet fuel).
• Keeps existing monitoring, reporting and third‑party verification rules and adds new reporting for CEF use and for cancelled emissions units.
• Applies to Canadian operators that emit more than 10,000 tonnes of CO2 in a year from international flights using large aeroplanes.
• Exempts humanitarian, medical‑evacuation, firefighting, positioning flights for those services, non‑fixed‑wing aircraft (helicopters), and military/state/police flights.
• Requires a three‑year “true‑up”: operators must cancel required offsets and submit verified cancellation reports after each three‑year compliance period (the first true‑up for 2021–2023 is due in 2025).
• Sets administrative penalties: up to $5,000 per individual and $25,000 per corporation for each infraction.

Who's affected#

• About 16 Canadian operators that run international services and exceed the emissions threshold.
• The three largest Canadian airlines would bear most of the cost — roughly 90% of the total industry cost.
• The rules touch flights between Canada and roughly 65 partner countries (as of mid‑2020).
• Numbers used in the government analysis: about 327,159 CORSIA‑eligible flights in 2018, forecast 253,439 eligible flights in 2021, rising to about 630,142 by 2035 under the recovery assumptions used.
• Large aeroplanes are defined as those with maximum take‑off weight over 5,700 kg.
• Small or very low‑activity operators are unlikely to be covered because of the 10,000 tonnes threshold.
• It is unclear how costs will be passed on — for example, whether fares or cargo rates will rise — that will depend on each operator’s pricing decisions.

Why it matters#

• Climate: The rule is meant to keep international aviation’s net CO2 at about 2019/2020 levels by having operators offset their growth in emissions. Transport Canada says affected Canadian operators would need to acquire between 54.4 million and 71.9 million tonnes of CO2 offsets over 2021–2035.
• Money: The government estimates the present‑value cost to operators of buying offsets plus monitoring and reporting at between $1.2 billion and $1.6 billion, with monetized global benefits from avoided climate damages of about $1.6 billion to $2.1 billion. The estimated net present value is between $362.9 million and $472.7 million for 2021–2035.
• Business impacts: Most costs fall on the largest carriers; smaller operators meeting the threshold face much smaller totals. The rules add some ongoing paperwork (monitoring plans, verified reports, cancellation reports) and a one‑time need to update emissions monitoring plans if they don’t already cover the new requirements.
• Uncertainty from COVID‑19: Because 2020 flight levels fell sharply, ICAO used 2019 as the pilot‑phase baseline and Canada’s estimates assume a slow recovery of traffic. That pandemic effect makes the size and timing of offset obligations and market prices for offsets uncertain.
• International consistency: Bringing CORSIA into Canadian regulations lets Canada meet its ICAO/Chicago Convention obligations and aligns Canada with other states that participate in the CORSIA offsetting phase.