CORSIA vs EU ETS: Why the Difference Matters for Direct Air Capture (DAC) and eSAF

12 March 2026

By: Dr David Mulrooney and Jeannie De Vynck

For a Direct Air Capture (DAC) company developing scalable and cost-effective carbon capture for eSAF, the difference between CORSIA and the EU ETS is not merely academic. It determines whether a strong carbon price exists, whether there is policy certainty, and whether there are funding mechanisms available to move projects from pilot scale to industrial deployment.

Electro-Sustainable Aviation Fuel (eSAF), produced from green hydrogen and captured carbon dioxide, is one of the few pathways able to reduce emissions from long-haul aviation while still using the existing aircraft fleet and fuel infrastructure.

The EU’s ReFuelEU Aviation regulation recognises this by introducing synthetic fuel mandates, with synthetic fuels defined as those produced from renewable hydrogen and captured carbon, which makes DAC essential in the long-term supply chain for eSAF. (See: SAF Regulations for more details.)

What is CORSIA?

The International Civil Aviation Organization (ICAO) operates the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

CORSIA is a global offsetting scheme designed to stabilise international aviation emissions.

Under the system:

1. Airlines calculate emissions from international flights.
2. Emissions above a baseline must be compensated.
3. Compensation is achieved through:
   • purchasing carbon offsets or
   • reducing obligations using eligible sustainable aviation fuels

The concept behind CORSIA is that global aviation requires a single international framework rather than multiple regional carbon markets.

CORSIA is therefore presented by ICAO as one element of aviation decarbonisation, alongside aircraft technology improvements, operational efficiencies and low-carbon fuels. This has led to debates about how regional schemes such as the EU ETS should interact with CORSIA.

However, CORSIA is primarily an offsetting mechanism, rather than a strict emissions reduction system.

What is the EU ETS?

The European Union Emissions Trading System operates differently. The EU ETS is a cap-and-trade carbon market.

The mechanism operates as follows:

1. A fixed emissions cap is set.
2. Allowances are issued and auctioned.
3. Companies must surrender allowances equal to their emissions.
4. The cap is gradually reduced each year.

This system creates a direct carbon price and generates revenue through the auctioning of allowances.

In aviation, the EU ETS currently applies to flights within the European Economic Area, while the treatment of flights to and from Europe remains under review.

According to data published by the European Commission in April 2025, greenhouse gas emissions from sectors covered by the EU ETS have declined to roughly 50% of their 2005 levels. This represents a cumulative reduction of more than 2 billion tonnes of CO₂-equivalent since the system was introduced. (asuene.com)

Why the EU ETS Matters for Funding Decarbonisation Technology

For a DAC developer, the EU ETS provides something that CORSIA does not: a major funding mechanism.

Auction revenues from the ETS support EU climate innovation programmes, including the EU Innovation Fund, which finances first-of-a-kind industrial decarbonisation projects. The Innovation Fund is expected to provide around €40 billion between 2020 and 2030 for low-carbon technologies. These funds are intended to support technologies such as carbon capture, industrial decarbonisation, synthetic fuels (including eSAF) and hydrogen production.

For deep tech such as DAC, this funding is important as early commercial plants require large capital investment and carry technical risk. Without public support mechanisms, like those funded through the EU ETS, it becomes harder to secure private investment.

Why eSAF Needs DAC

eSAF is produced using three main inputs: renewable electricity, green hydrogen and carbon dioxide. The carbon dioxide component can be captured directly from the atmosphere with Direct Air Capture.

There are distinct advantages to using DAC to provide the CO₂ feedstock for eSAF (See: Why Direct Air Capture is Critical to Sustainable Aviation Fuel Production). Using DAC allows synthetic fuels to be close to carbon neutral, because the carbon released during combustion was previously removed from the atmosphere. However, to develop DAC to be cost-effective at scale, public funding and policy support are needed.

Concerns about Weakening the EU ETS

Despite its impact, the EU ETS has recently faced political criticism. Some European political leaders have argued that the system increases costs for industry and may weaken competitiveness, and proposals have included calls to weaken the system or reconsider certain rules.

The shockwaves of weakening the EU ETS would be felt for decades to come. Not only would deep tech decarbonisation technologies feel the impact on funding for innovation, but it would also hit climate action and set back progress made towards keeping global warming in check.

Extend the EU ETS to International Flights

There are voices in the EU, such as the SASHA Coalition, among other organisations, that argue the EU ETS should be extended to international flights departing Europe.

Among their arguments against CORSIA are that it relies heavily on offsets rather than direct emissions reductions, its enforcement mechanisms are limited and most emissions are unregulated. Furthermore, CORSIA accommodates unsustainable crop and fossil based fuels.

Extending the EU ETS would therefore cover a larger share of aviation emissions, create stronger demand for low-carbon fuels, and generate more revenue to fund technologies such as DAC and eSAF.

From this perspective, expanding the ETS would accelerate the aviation energy transition rather than slow it.

Policy Certainty and the Role of Mandates in Investment

Recent discussion around the ReFuelEU Aviation eSAF mandates highlights the importance of policy stability. Although some EU officials have indicated that the goal is not to penalise industry for fuels that are not yet available at scale, the EU Commission maintains that the EU ETS will remain in place and support the development of supply.

This is important too for investors as they require predictable demand and stable policy frameworks before committing capital to new technologies. Large capital infrastructure such as DAC and eSAF projects require long term commitments from the state and region to enable deployment of capital to realise projects that move the needle on eSAF requirements.

Conclusion

From the perspective of Direct Air Capture developers, the debate between CORSIA and the EU ETS is about investment certainty. Scaling DAC to supply carbon for eSAF requires large capital investment for early-stage deployment support and predictable demand for low-carbon fuels. The EU ETS contributes to all three by creating a carbon price and generating funding for innovation.

As aviation seeks credible pathways to net-zero emissions, the strength of carbon pricing mechanisms and the availability of funding for new technologies will play a major part in determining how quickly solutions such as eSAF can be deployed.

For more: 

• Sustainable Aviation Fuel
• What is eFuel?
• What is eMethanol?
• Methanol-to-Jet Fuel
• Direct Air Capture Technology

Interested in NEG8 Carbon’s CO₂ capture technology?

Contact the NEG8 Carbon Team