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 and sellers of carbon credits face numerous risks due to the rapid development of the carbon markets, differing 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.
Insurance solutions for the carbon market
Non-delivery risk:
Cover for the pre-payment amount against later non-delivery of the carbon credits.
Political risk insurance:
Protection against the financial loss of carbon credits resulting from political perils.
Non-payment insurance for banks and financial institutions:
Examples of insurable transactions to mitigate against non-payment risks specific to carbon credits:
- Pre-payment/ open-account facilities
- Borrowing base
- Derivatives
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.
