We must scale up high-quality carbon projects to fight climate change. This requires significant financing. Due to lack of supply and the desire for quality, investors and buyers often engage with projects at early stages via pre-payments and investments.
However, given the long timeframes of carbon projects and evolving risks, there is potential of a project underperformance that leads to a non-delivery of resulting carbon credits.
Carbon Purchase Protection Cover
Insure forward purchased carbon credits against delivery risk
Kita brings a solution.
Kita’s Carbon Purchase Protection Cover protects buyers and investors of forward purchased carbon credits against under-delivery. If your carbon credits underperform, Kita covers your loss.
It’s as simple as that.
Why buy Carbon Purchase Protection Cover?
High integrity net zero targets necessitate high quality carbon project investments, as part of a wider climate strategy.
However, investing into carbon projects is challenging, often combining long term horizons, emerging markets, young companies and nuanced processes, all the while taking in societal, environmental and reputational considerations.
These factors make investment a tricky path to navigate, however also a necessary one in order to secure supply of high-quality carbon credits.
For proactive buyers and investors who wish to pre-purchase and/or invest in carbon projects, but don’t wish to hold the risk of underperformance, Carbon Purchase Protection Cover (CPPC) is a solution.
CPPC wraps forward purchases of carbon credits with comprehensive insurance that protects against under or non-delivery.
Key benefits of Kita’s Carbon Purchase Protection Cover (CPPC):
Additional level of due diligence and quality assessment enables peace of mind and a deterrent against reputational risk.
Legally binding and regulated insurance policy safeguards buyers and investors of carbon credits, providing certainty of expectation and a safety net that reduces the risk and impact of loss.
Comprehensive coverage against loss due to key reasons for carbon project underperformance - covering avoidable, unavoidable and carbon related risks.
The familiar framework of insurance as a risk mitigation mechanism provides confidence for in-house stakeholders to smooth the process of getting investments over the line.
Insurance claims can be paid in cash or replacement carbon credits, enabling flexibility for clients.
Carbon Purchase Protection Cover — How it works
Underwriting process:
We pride ourselves on tailored insurance policies rooted in deep knowledge and re-calibrated as we acquire new data.
We give indicative quotes quickly to enable upfront budgeting, and work closely with clients throughout their investment process.
Our focus is making the addition of insurance to a transaction an efficient and smooth process.
Point of purchase:
You can purchase Carbon Purchase Protection Cover at the point of purchase of carbon credits, or at any point up to final date of carbon credit delivery.
Speak with us early in your carbon journey! Insurance provides an additional level of due diligence and quality assessment on carbon projects that can help steer purchasing decisions.
Projects covered:
A wide range of carbon project types and regions.
We expect carbon projects to be certified by a recognised Carbon Standard, with an independent third party performing validation and verification.
Policy coverage:
Kita's insurance protects the carbon buyer/investor (Insured) against carbon delivery risk, where the carbon seller (Obligor) fails to deliver carbon credits to the Insured on the terms specified in the parties' carbon purchase agreement.
Policy period:
Our insurance can extend to 10 years.
Kita uses remote monitoring technology to monitor the progress of carbon sequestration achieved by your carbon project while it is insured.
Exclusions:
Political and regulatory risk - this is covered by our separate and complementary Political Risk policy
Any loss to the Insured further to the under-delivery of carbon credits, including reputational damage and regulatory fines.
Loss or damage to the carbon credits post-issuance to the insured, including non-permanence or invalidation post-delivery.
NB: Kita’s focus is building a portfolio of carbon insurance to protect against these risks, and many more. Please follow us to hear the latest on our ongoing product development roadmap.
