Carbon markets can accelerate action to combat climate change. Carbon credits incentivize investment in projects that remove, reduce or avoid emissions (e.g., reforestation and direct air capture and storage projects), and trade in both the primary and secondary markets. Buyers, sellers and investors of carbon credits face numerous risks due to the rapid development of the carbon markets, multiple standards and the varied nature of projects.
Why insure carbon credits?
Enhances stakeholder confidence in carbon credits
Provides increased lending capacity
Facilitates financing of carbon projects
Balance sheet protection
Insurance solutions for the carbon market
Non-delivery risk:
Cover for the prepayment amount against subsequent non delivery of the carbon credits. Policy indemnity can be in the form of carbon credits or financial compensation.
Political risk insurance:
Protection against the financial loss of carbon credits resulting from political risks including corresponding adjustment risks.
Carbon lender credit non-payment insurance:
Basel compliant credit non payment insurance which can help bank lenders achieve capital relief, through the use of AA-rated Lloyd’s paper.
Post delivery risks:
Financial protection against invalidation of carbon credits, non permanence and reversal events.
EU ETS and Fuel EU protect:
Protection against risks of non payment and insolvency between counterparties linked to industries operating under compliance market schemes.
Why WTW?
- Matching entrepreneurial developments with supporting insurance solutions
- Access to specialist insurance markets globally — providing cost-effective solutions
- Provider of climate risk solutions across many industries and geographies
- Laser focus on providing consistently good service — from initial discussion through to support for claims when required
For smarter ways to manage carbon credit risks and opportunities, please get in touch.
