Vietnamese airlines are facing millions of dollars in costs to purchase carbon credits, with concerns that this could lead to an increase in airfare. This comes as part of the country’s participation in the Carbon Offsetting and Reduction Scheme for International Aviation (Corsia), a program aimed at reducing the aviation industry’s environmental impact.

Vietnam's airlines voluntarily join Corsia in 2026

According to the Civil Aviation Authority of Vietnam (CAAV), Corsia will have a direct impact on Vietnamese airlines, including both its voluntary and mandatory phases. The decision to participate in the voluntary phase of Corsia presents significant challenges, particularly in terms of financial burden.

Based on preliminary calculations, the cost for Vietnam's airlines to purchase carbon credits during the voluntary phase - from January 1, 2024, to the end of 2026 - could range from $13 million (at $6 per carbon credit) to $92 million (at $40 per carbon credit).

If Vietnam’s national carrier joins the voluntary phase starting January 1, 2025, it will incur costs ranging from $4.6 million to $31 million in 2025 alone, depending on the price of carbon credits. In 2026, these costs are expected to rise to between $5.6 million and $37.5 million.

The CAAV acknowledged that joining the voluntary phase of Corsia even one year early would be a significant financial burden for airlines.

Vietnam's airlines have agreed to begin participating in Corsia's voluntary phase on January 1, 2026.

These new regulations are expected to have a major impact on operating costs and airfare prices, as well as the competitiveness of airlines operating flights between the EU and ASEAN regions, including Vietnam. The CAAV admits that the additional costs incurred through Corsia participation may lead to higher airfare in the near future.

Moving towards 100% green fuel

In line with its sustainability goals, the Vietnamese government has implemented a series of initiatives aimed at reducing carbon emissions in the aviation sector. Prime Minister-approved Decision No. 876 in 2022 outlines a national action plan for green energy transition and carbon emission reduction in the transportation sector.

The plan outlines that, starting from 2027, Vietnam’s aviation sector will begin exploring alternative fuels to supplement current aviation fuel. By 2035, at least 10% of short-haul flights will use sustainable fuel. Moreover, 100% of newly-invested passenger and ground vehicles at airports will run on electricity or green energy.

By 2040, all vehicles operating within airport premises will use electric or green energy (except for specialized equipment). By 2050, Vietnam’s aviation industry will fully transition to using 100% green energy and sustainable aviation fuel for aircraft.

In support of this plan, the Ministry of Transport has issued its own action plan, which includes reviewing and proposing amendments to the Civil Aviation Law of Vietnam by 2030. This will include provisions for transitioning aviation equipment from fossil fuels to electric or sustainable energy.

Additionally, new regulations are being developed to govern fuel consumption and CO2 emissions in civil aviation, as well as to improve energy efficiency for aircraft operations. Plans are also in place to create standards for solar energy systems at airports and to pilot the transformation of several airports into "green airports."

The International Civil Aviation Organization (ICAO) introduced Corsia as part of its goal to achieve net-zero emissions in international civil aviation by 2050. Under Corsia, countries are required to monitor, report, and verify CO2 emissions from international flights annually, starting in 2019.

The carbon offsetting process under Corsia, which began in 2021, will continue until 2035. Corsia is divided into two phases: 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 joined Corsia’s voluntary phase.

Ngoc Ha