FAQs
What are carbon credits?
Carbon credits typically represent one tonne of CO2 equivalent which has been avoided, reduced, or removed from the atmosphere. Carbon credits can be used for multiple purposes, one of which is to offset hard-to-abate, residual carbon emissions.
An example of each type of credit is:
Avoidance – REDD (avoided deforestation)
Reduction – Fuel efficiency
Removal – Afforestation
What is carbon removal?
Carbon removal is the process of removing carbon dioxide from the atmosphere and locking it away. Per The Oxford Principles for Net Zero Aligned Carbon Offsetting:
“Most offsets available today are emission reductions, which are necessary but not sufficient to achieve net zero in the long run.”
“Emission reductions include avoided emissions,” e.g. using renewable energy to replace planned fossil fuel power plants, programmes to update inefficient cook stoves, and avoided deforestation.
“In contrast, carbon removals are offsets generated by projects that remove carbon dioxide directly from the atmosphere.” .
“Users of offsets should increase the portion of their offsets that come from carbon removals, rather than from emission reductions, ultimately reaching 100% carbon removals by mid-century to ensure compatibility with the Paris Agreement goals.”
Which carbon projects does Kita cover?
We require that the carbon project is certified by a Carbon Standard within our list of recognised standards used in the carbon markets, with an independent third party performing validation and verification of carbon expected/delivered.
Kita’s Carbon Purchase Protection Cover is currently available for terrestrial forestry and biochar projects. Our Fraud & Negligence Cover and Abandonment & Insolvency Cover are technology-agnostic.
We are continually working on expanding our product coverage to other project types, so please reach out if there is a technology you are interested in.
Are claims paid in cash or carbon?
Clients have the option to receive eligible insurance claims in cash or like-for-like replacement carbon credits. This offers clients flexibility in risk management options and greater confidence in meeting their high-integrity climate targets.
Replacement carbon credits for eligible claims will be distributed from Kita’s proprietary Carbon Supplier Pool. Read more here.
What is carbon delivery risk?
Carbon delivery risk is the risk that carbon sequestration promised by a carbon solution won't be realised in full. Delivery risk stems from two key facts:
Carbon projects, particularly carbon removal, take time. New technologies need time to scale up. Nature needs time to grow and restore.
High quality carbon credits are in short supply, leading to an increase in forward purchases. Forward purchases can finance carbon projects years before a verified carbon credit is ready to be retired against a company’s climate strategy.
Different types of carbon projects have different types of delivery risk.
"Engineered" carbon removals often rely on newly developed technology which may not perform as expected. Start-ups dominate this landscape with their associated solvency risks.
"Nature-based" carbon projects face climate-related risk (e.g. fire, storm), plus risks associated with fraud, negligence, and political risks in host countries.
How can we buy Kita’s insurance?
Please contact us to discuss. How you buy insurance will vary based on where you are located.
We often speak with clients early in their carbon purchase journey to provide technical risk assessments as an additional level of due diligence and quality assessment on carbon projects that can help steer purchasing decisions.
What other forms of carbon insurance is Kita developing?
We are developing a portfolio of insurance products to protect against multiple risks for all parties in the carbon markets ecosystem.
Please get in touch to understand our product roadmap.
Where can Kita provide insurance?
Kita can provide insurance to companies based in the UK, US, Canada, Switzerland and Singapore. This is based on the location of the insured, not the carbon project. Carbon projects can be located worldwide, with some exceptions for countries with embargoes/sanctions/regulatory restrictions.
We are continually working on expanding our regulatory remit so please don’t hesitate to get in touch if you are based in another jurisdiction.
Do I have any counterparty risk with Kita?
Kita is a Lloyd’s Coverholder which means we have a credit rating which stems from Lloyd’s of London. Kita is backed by established insurance companies with A-rated paper, and these companies hold regulated capital on our behalf and pay our clients’ claims. Even if Kita were to go out of business, our clients’ claims would still be covered for the life of their policy.
Does the voluntary carbon market facilitate greenwashing?
Decarbonisation is always the first step in a company’s climate journey. Any remaining unavoidable emissions can then be offset as part of a high integrity climate strategy.
An Ecosystem Marketplace Report published in 2023 found that voluntary carbon credit buyers were 1.8 times more likely than non-buyers to be decarbonising year-on-year and also demonstrated more positive behaviour towards emissions targets and disclosures.
At Kita, we strongly believe that upfront financing is essential to scale high-quality carbon projects, which climate science now states as essential to fight climate change.
The carbon credits integrated into a high integrity climate strategy should:
be based on a portfolio approach to diversify impact and reach; and
be high-quality and consistent with best practices standards, e.g. Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles, Voluntary Carbon Market Integrity Initiative’s Claims Code of Practice, Oxford Offsetting Principles.