Brian Jeffrey
Vietnamese airlines are facing substantial expenses related to purchasing carbon credits under the Carbon Offsetting and Reduction Scheme for International Aviation (Corsia). This initiative aims to mitigate the aviation sector’s environmental effects and may result in higher ticket prices.
The Civil Aviation Authority of Vietnam (CAAV) has indicated that the Corsia scheme will directly influence local airlines during both voluntary and mandatory implementation phases. Opting to enter the voluntary phase poses notable financial challenges.
Preliminary estimates suggest that the cost for Vietnamese airlines to acquire carbon credits during the voluntary phase, from January 1, 2024, to the end of 2026, could vary significantly—from approximately $13 million at a price of $6 per credit to around $92 million at $40 per credit.
If Vietnam’s main airline participates in the voluntary phase starting January 1, 2025, it may face costs ranging from $4.6 million to $31 million in 2025, depending on the carbon credit rates. These expenses are projected to increase to between $5.6 million and $37.5 million in 2026.
The CAAV has recognized that initiating participation in the voluntary phase of Corsia even one year early would create a considerable financial strain for airlines.
These new regulations are predicted to significantly impact operating expenses, leading to higher airfares, and challenge the competitiveness of airlines flying between the EU and ASEAN, including Vietnam. CAAV acknowledges the risk of increased airfare resulting from Corsia participation.
To promote sustainability, the Vietnamese government has launched various measures to lower carbon emissions in aviation. A prime minister-approved action plan in 2022 set forth a nationwide strategy for transitioning to green energy and reducing transport sector carbon emissions.
This strategy aims to explore alternative fuels for the aviation sector starting in 2027, with a goal of using sustainable fuel for at least 10% of short-haul flights by 2035. Additionally, all newly acquired passenger and service vehicles at airports will operate on electricity or alternative green energy sources.
By 2040, the goal is to ensure that all vehicles on airport properties (aside from specialized machinery) switch to electric or green energy. By 2050, Vietnam’s aviation will aim to operate entirely on green energy and sustainable aviation fuel.
Supporting this initiative, the Ministry of Transport has introduced its action plan, which includes revising the Civil Aviation Law by 2030 to facilitate the transition of aviation equipment from fossil fuels to sustainable energy sources.
Furthermore, new regulations are being established to manage fuel consumption and carbon emissions in civil aviation, aimed at enhancing energy efficiency in aircraft operations. There are also plans to set standards for solar energy systems at airports and to designate several airports as “green airports.”
The International Civil Aviation Organization (ICAO) launched Corsia to help achieve net-zero emissions in international aviation by 2050. Under Corsia, countries are required to annually monitor, report, and verify CO2 emissions from international flights, with initial reporting beginning in 2019.
The carbon offsetting scheme under Corsia, which started in 2021, will persist until 2035 and consists of a voluntary phase from 2021 to 2026 (including a pilot phase from 2021 to 2023 and phase 1 from 2024 to 2026), followed by a mandatory phase from 2027 to 2035.
As of January 1, 2024, 126 countries have signed up for Corsia’s voluntary phase.
