131 O N E R E P O R T 2 0 2 2 OVERVIEW BUSINESS OVERVIEW AND PERFORMANCE CORPORATE GOVERNANCE FINANCIAL INFORMATION SUSTAINABLE BUSINESS DEVELOPMENT Carbon Offsetting In 2016, Thailand was among an initial group of States which signed up to voluntarily participate in ICAO’s CORSIA thereby mandating all Thai-registered airlines to comply with CORSIA timelines and targets. Since the scheme came into force in 2019, Thai AirAsia is required to meet two key targets. The first is tomeasure our CO2 emissions from international flights and submit verified annual reports to the CAAT for onward submission to the ICAO Central Registry. From 2021 onwards, Thai AirAsia, like all Thai-registered carriers, are required to offset any carbon emissions generated above a baseline set at the 2019 level of emissions. Since 2019, Thai AirAsia has fully complied with CORSIA requirements to submit verified reports of our annual carbon emissions from international flights to the CAAT. As global emissions level from international aviation is not expected to recover to 2019 levels before 2024, we are not likely to face mandatory offsetting obligations before the 2024-2027 period. Another important development that took place in 2022 was the decision of 41st ICAO General Assembly to lower the CORSIA offsetting baseline to 85% of 2019 emissions for the reporting period starting 2024. In our impact assessment, we established that while these regulatory developments do not have an immediate impact onThai AirAsia, the loweringof theCORSIAbaseline is likely to result in higher offsetting requirements starting 2024. We identified at least one CORSIA-eligible carbon offsetting programme in Thailand. As a next step to our preparation for a future of carbon offsetting, Thai AirAsia, as part of AAAGL, is developing a programme to enable voluntary offsetting by guests when bookingAirAsia flights. This programme is scheduled to be launched in 2023. The implementation of the voluntary offsetting programme will provide us with the resources to build internal capacity to navigate carbon markets and purchase CORSIA-eligible credits. A final point to note is that although the industry is encouraged to apply in-sector approaches that aim at emissions avoidance, until SAF becomes commercially viable at lower prices and larger volumes, Thai AirAsia’s decarbonisation efforts will strongly feature purchase of carbon offsets. Carbon offsetting is expected to deliver a higher proportion of our emissions reduction at the early stages of our net zero journey before tapering down as in-sector solutions become more readily available. For more detailed information on the AirAsia Aviation Group’s net zero approaches, please refer to Capital A’s Berhad’s Sustainability Statement in its Annual Report 2022.
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