Latin America braces for a wave of Article 6 authorisations for Paris markets and CORSIA

Officials and buyers across Latin America expect host-country LoAs to accelerate. These letters are what make credits usable for NDC transfers under Article 6 or as CORSIA Eligible Emissions Units (EEUs). The expected wave includes governments that have historically sat out Paris markets, CORSIA, or both.

Until now, authorisations have been the main constraint on supply. IATA projects airline demand for EEUs in CORSIA’s first phase (2024–2026) at between 146 and 236 million tonnes. A recent Sylvera report estimated that nearly 600 million potentially CORSIA-eligible credits remain trapped behind host-country authorisation bottlenecks. Only 47 million currently meet all requirements, mainly because LoAs have been slow to arrive.

Several countries in the region are already moving. Guyana’s jurisdictional REDD+ programme feeds the CORSIA market, and Paraguay is planning its own J-REDD+ programme with CORSIA in mind. Peru became the first Latin American country to register a cooperative approach on the UNFCCC’s centralised accounting platform and has authorised five initiatives, including a landfill methane project. Chile is approving methodologies for its Singapore agreement and is courting new buyers.

Regional buyers are positioning as well. LATAM Airlines and Colombia’s ISA are preparing a partnership to procure CORSIA-eligible units, focusing on Chile, Colombia, Peru and Brazil. LATAM Airlines is targeting countries with advanced Article 6 legislation. Its sustainability manager said that while the region will not be a major source of CORSIA demand, it is seen as a significant potential supplier.

Signals to watch

• Supply bottleneck starting to ease: A rise in LoAs from Latin America would add to a CORSIA Phase 1 supply pool that has been extremely tight. Airlines and traders should watch for new authorisations before the Phase 1 retirement deadline. Note that spot prices for Phase 1 EEUs have already weakened earlier this year.
• Late movers become new hosts: Countries joining Paris markets or CORSIA for the first time create opportunities, but they come with institutional, registry and policy risk. Investors should look closely at LoA wording, at the terms for corresponding adjustments, and at whether the government has a track record of revoking or denying authorisations. Kenya’s denial of an LoA to Koko Networks remains a reminder of that risk.
• Dual-use LoAs raise the strategic stakes: LoAs that allow use for either NDCs or CORSIA give sellers flexibility on price. Host governments have to set clear priorities on how much mitigation to export versus keep for their own NDC. Brazil’s discussion of a hybrid model that would keep half of mitigation outcomes at home shows the tension.
• Jurisdictional REDD+ as a volume driver: Guyana’s ART TREES model, and Paraguay’s plans to follow it, point to large sovereign forest volumes entering CORSIA. For developers of nested or project-level REDD+, jurisdictional programmes will shape both eligibility and price.
• EU interest as a future demand channel: A European Commission official recently called Latin America and the Caribbean the most comprehensive offer for future international carbon cooperation with EU carbon pricing mechanisms. Watch for the region to become a supplier if the EU opens a role for international credits after 2030.

Sources:

• IATA and airline associations – call for LoA issuance
• Carbon Pulse – LATAM roundup: Peru, Sylvera report, EU interest
• Carbon Pulse – LATAM roundup: Guyana, Paraguay, CORSIA supply
• Carbon Pulse – LATAM Airlines regional CORSIA procurement partnership