KEY TAKEAWAYS
The EU ETS is cap-and-trade: you buy allowances at 80 to 85 euros, the auction revenue flows to member states and EU funds, and the climate effect per euro is hard to trace. CORSIA has no allowances and no auctions: every dollar buys a verified tonne from a specific project at around USD 12 to 18, auditable from purchase to cancellation, with a published share going to the host country. They are complements, not rivals, and from 2029 the EU links them through a cost deduction. Your cheapest compliance instrument, per tonne and by far, is the eligible credit.
You pay into both systems. Do you know who actually receives the money? The answer is the most useful lens on why Brussels just decided to run both schemes side by side, and it is also the strongest argument for securing your credits early rather than late.
Two definitions, two theories of change
The EU ETS is a cap-and-trade system: a declining cap, one allowance (EUA) surrendered per tonne, allowances auctioned or traded, 100 percent of emissions priced on covered routes. CORSIA is ICAO’s global offsetting scheme: 130 states, one set of rules, and units cancelled only for growth above 85 percent of 2019 sector emissions.
The EU ETS has priced intra-EEA aviation since 2012; free allocation is fully phased out since 2026, and the cap shrinks at 3.7 percent per year from 2031 and 1.7 percent from 2036 (COM(2026) 616, Art. 9). Scarcity is the product. CORSIA prices only growth: the 2024 Sector Growth Factor is 15.4 percent (sector emissions of 361.2 Mt against a baseline of 305.5 Mt), the same rate for every operator, applied to your CO2 on routes between participating states.
Where your ETS money goes: into a pot
Auction revenue flows to member states and EU funds: the Innovation Fund, the Modernisation Fund, the new 100 billion euro Industrial Decarbonisation Bank, SAF support of up to 130 million allowances to 2040, contrail incentives of up to 420,000 allowances per year. How much of each euro removes CO2 is difficult to trace.
That is a theory of change, not a flaw: the pot funds what no offset price could carry. Direct air capture sits above USD 500 per tonne and needs exactly this subsidy-type support. The SAF reserve covers 50 percent of the price gap for advanced biofuels, 60 percent for renewable hydrogen and RFNBOs, 100 percent on small islands and outermost regions (Art. 3c(6)), restricted to EEA-produced fuels with a 10 point uplift for EU feedstock. Useful, fundable, and far away from a verified tonne today.
Where your CORSIA money goes: to a project you can audit
Every compliance dollar buys one verified tonne from a named project, with a registry entry auditable from purchase to cancellation, and a published share flowing to the host country.
Rwanda publishes its complete Article 6 fee schedule (Ministerial Instructions N° 001/MoE/26), so you can follow one cookstove credit line by line: USD 6.00 project development (hardware, distribution, certification, capital costs), USD 0.30 registration and issuance fees, USD 2.00 corresponding-adjustment fee to the state, USD 1.60 uplift because 20 percent of units are retained in kind (15 percent revenue share for domestic climate priorities, 2 percent authorization, 2 percent cancelled for overall mitigation, 1 percent national buffer), USD 1.25 political risk insurance, USD 0.50 handling. Delivered cost: roughly USD 11.65 before margin. Your money reaches the household that got the stove, the government’s climate budget, and the tonne cancelled in the registry. Try tracing an allowance euro that far.
The host-country share is not overhead. Authorization is a sovereign concession: the country gives up counting the reduction toward its own NDC. Where the fees and revenue share do not make that trade rational, no Letter of Authorisation is signed and no supply exists. This is exactly why eligible supply is scarce, and why it stays scarce
What a tonne costs you: roughly seven to one
Eligible credits trade around USD 12 after the July repricing (peak USD 22.50 in January 2025); EUAs trade around 80 to 85 euros. And CORSIA prices only growth, while the ETS prices every tonne.
Stack the reference points: an eligible credit near USD 12. An EUA near 83 euros. The UK’s proposed CORSIA penalty at 100 pounds per tonne, France’s enacted one at 100 euros (payment does not discharge the obligation), Canada at up to CAD 25,000 per violation plus a flight ban. The eligible credit is the cheapest compliance instrument in aviation by a wide margin, even after rising 19 percent in three days. That arbitrage does not stay open forever: the December 2027 median scenario sits at USD 33.
Which makes more sense? Wrong question. The EU just answered it
Neither replaces the other: the ETS pot funds frontier innovation (DAC above USD 500), CORSIA scales what works today (cookstoves around USD 7, jurisdictional REDD+ from USD 2). COM(2026) 616 institutionalises the combination.
From 2029, your CORSIA costs on dual-covered routes come off your ETS bill via the published EUA-to-credit price ratio, currently around seven to one (Art. 12(3-f)). And from 2036 the EU becomes a buyer itself: Article 9b sets aside up to 260 million allowances to purchase up to 260 Mt of high-integrity international credits for 2036 to 2040, with a market report due 31 January 2033 and a hard fallback (linear reduction factor reverts to 2.7 percent) if credits are not available. 260 Mt is more than every published estimate of first-phase CORSIA demand. Read that as a buyer: the largest structural purchaser this market has ever seen intends to enter it, right behind you, buying the same asset class. Every year you wait, you compete with more capital for the same authorised supply.
Do not confuse Article 9b with removals: a separate Article 9c funds 250 million tonnes of domestic BioCCS and DACCS removals, auctioned 2031 to 2040, payment on delivery. The 260 Mt facility is about international credits, the asset you buy for CORSIA today.
See the money trail with worked numbers
The CORSIA Guide sets out both schemes side by side: mechanics, prices, the full Rwanda fee table, the deduction case study and the demand outlook to 2036.
→ Download The CORSIA Guide and see where every compliance euro actually goes.
Frequently Asked Questions
What is the main difference between CORSIA and the EU ETS?
The EU ETS prices 100 percent of covered emissions and sends auction revenue to member states and EU funds. CORSIA prices growth above 85 percent of 2019 levels and sends every dollar to a specific verified project.
Where does EU ETS money go?
To member states and EU funds: Innovation Fund, Modernisation Fund, the 100 billion euro Industrial Decarbonisation Bank, SAF support up to 130 million allowances, contrail incentives. Only part reaches direct emissions reduction.
Where does CORSIA money go?
To the project and its host country, auditable in the registry. Rwanda example: USD 6.00 project cost, USD 2.00 adjustment fee to the state, 20 percent of units retained in kind, delivered cost about USD 11.65.
Is CORSIA cheaper for airlines?
Roughly seven times cheaper per tonne (USD 12 versus 80 to 85 euros), on a fraction of the tonnage. Even at USD 18 a credit costs a fraction of one EUA.
Sources: European Commission, COM(2026) 616 final, 17 July 2026, Arts. 9, 9b, 9c, 10f, 12(3-f), 3c(6); The CORSIA Guide (Econetix, 17 July 2026), Sections 02, 04, 05; Republic of Rwanda, Ministerial Instructions N° 001/MoE/26; ICAO, SGF 2024; ICE EUA and CORSIA futures 2026; national enforcement frameworks (UK, France, Canada).
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Martin Riegler
