# Corpsia--A Feasible Second Best Solution?
## 3 CORSIA's Carbon Offset Market
### Market Composition  
The regulated carbon offset market in form of the CDM has lost relevance in the last decade due to limits on the use of offsets in the European Union Emissions Trading System (EU ETS) being reached and to the delay in agreement on a new successor regime for the Kyoto Protocol [47]. Nevertheless, the market rationale survived in the private sector through a host of voluntary carbon offsetting schemes regulated by private offset certification programs. Offsets are traded on the secondary market, on stock exchanges, or by being directly purchased from the initial offset project. The governance of the voluntary offset market is loosely structured. While offsetting standards set the rules and monitor compliance, there are a number of different types of organizations that generate the offset supply. They may span the entire process, from initiating and implementing greenhouse gas reduction projects and managing their assessment and verification to selling the resulting credits to emitters. Other offset organisations act more like brokers, simply buying and selling offsets [48]. Offset projects are regionally centralized, predominately located in the Global South due to lower marginal abatement costs and development assistance. For example, 60% of the total CDM supply potential comes from China alone [49]. The carbon offset market is concentrated among carbon offset project types. In 2019, around 100 Million tonnes of CO\({}_{2}\) equivalents were traded [50]. Renewable energy (RE) and forestry and land use are the most important offset types by far, representing 79% of offsets traded in 2019 (see Figure 2). For example, projects which focus on the exchange of household devices with less energy consumption (HH), such as cook stove projects, only accounted for 6.4% of all traded offsets in 2019. Offset certification programs are highly concentrated in private companies. The most common standard is VERRA's Verified Carbon Standard, accounting for around 60% of all offset transactions in 2019. Other popular standards are Gold Standard (17%), CDM (8%), Climate Action Reserve (8%), and American Carbon Registry (3%), all of which are eligible under CORSIA (see Figure 2). Public standards lost importance, as the small share of CDM transactions indicates, due to the collapse of the market in the early 2010s. As a result, only one third of CDM projects have continued to issue offsets. However, the majority of projects continue GHG abatement without issuing offsets, while other project developers have gone bankrupt [19; 51]. Especially vulnerable projects did not survive [52]. Nonetheless, the CDM has by far the largest capacities of carbon offsets, although other certification program standards could steadily increase their supply (see Figure 3a). Figure 2: Market share of program standards and project types in 2019. Notes: Panel (**a**) shows the market share of carbon offset certification programs in 2019 based on traded carbon offsets. Panel (**b**) shows the market share of carbon offset project types in 2019 based on traded carbon offsets. RE: Renewable Energy; HH: Household energy efficiency, Forestry: Forestry and land use; Waste: Waste handling; Industrial: Industrial processes; CDM: Clean Development Mechanism; GS: Gold Standard; ACR: American Carbon Registry; CAR: Climate Action Reserve; GHG: China Greenhouse Gas Voluntary Emission Reduction Program. Source: Donofrio 2020, own illustration. CORSIA's selection of eligible certification program standards is essential for the project type composition of CORSIA's offset supply, as private standards tend to specialize their offset portfolio. Figure 3 shows the program standard-specific composition of offset project types over time by focusing on those three project types per program standard that deliver the largest relative amount of offsets. Smaller project types are summarized under 'others'. Figure 3b shows that the composition of the CDM is heterogeneous and constant over time.