Insurance has a critical role to play in supporting the carbon market as the world continues its decarbonisation journey to tackle climate change.

This report, co-authored with specialist management consultancy, Oxbow Partners, estimates the total addressable market for carbon credit insurance to be around $1bn of annual Gross Written Premium (GWP) in 2030, rising to $10-30bn GWP by 2050. It is inevitable that there will be significant growth in the sector: the question is when, not if.

Can carbon credits be ‘like-for-like’?

This report offers an overview of the challenges related to carbon credit fungibility and the evolving solutions in the carbon markets. It emphasises the importance of ongoing assessment, refinement and collaboration in addressing these challenges and underscores the need for a balanced approach in order to achieve fungibility while maintaining integrity in the carbon markets.

Buffers within the Voluntary Carbon Market (VCM) are highly debated, with commentary ranging from confusion as to the function of a buffer, to frustration about the level of contribution from project developers, to appreciation for an inbuilt risk management mechanism that is core to the functioning of the VCM.

This report aims to offer clarity about the ways in which buffers and insurance interact, and how they can work together to act as a stamp of confidence for carbon credit transactions.

The carbon removal market requires the same market mechanisms and risk frameworks as those currently present in financial markets. If accounting, credit ratings and insurance can be formalised, there is an enormous opportunity to harness private capital for the carbon removal sector.

This report, co-written with carbon ratings agency, BeZero Carbon, explains how these traditional capital market mechanisms can be applied to the carbon removal market in order to unlock its growth.