Insurance for carbon credit forwards

Area characterisation:

Terrestrial

Objective:

Guarantee future carbon credit delivery

Start/end date:

1 January 2024

Financing:

Private

Potential impacts/benefits:

Guarantees future carbon credit supply for buyers
In-kind replacement on seller default
Unlocks private investment in NbS with long delivery timelines

Actions:

Insures forward purchases of carbon credits against non-delivery from natural catastrophe, weather and political risks, offering in-kind replacement to build buyer confidence in afforestation and reforestation projects.

Organisations:

SwissRE, Good Carbon

Contacts:

Case study referred by UNEP FI. For more information, please contact: info@naturance.eu.

Insurance for long-term carbon credit purchases that offers in-kind replacements in case of defaults of carbon credit sellers. A solution that helps companies secure their future carbon credit supply by insuring the provision of global carbon credits from afforestation, reforestation and revegetation projects with delivery dates up to five years in the future. The insurance of non-delivery due to natural catastrophes, weather events, and certain political risks aims to enhance confidence for carbon credit buyers in the purchase of credits on a forward contract basis and attract more private investment in nature-based climate solutions, especially where there is a lag between investment and experiencing benefits.

Furthermore, by strengthening the financial trust in carbon credits acquired on a forward contract basis, the product allows the transition of activities in adopting nature-positive carbon mitigation approaches that otherwise may have been deemed as too risky.