Kita offers a suite of carbon insurance products and services that help reduce risk and scale opportunity
Risk varies across the carbon credit lifecycle, with factors including type of carbon project and location adding further nuance. Kita’s insurance products are tailored to offer buyers, sellers and intermediaries protection for the risks specific to their transactions.
Insurance is an integral element of every high-value market. The core function of insurance is to assess, price and mitigate risk, enabling businesses to take (calculated) risk by swapping the uncertainty of future losses with the certainty of an insurance premium.
Applying insurance-led analysis to carbon transactions leads to an increase in standards of delivery, transparency and management, supporting price differentials that drive a flight to quality and leading to greater investment in high-quality carbon solutions.
Understanding the risk landscape and identifying the key risks that matter most to your business is essential.
Key categories of carbon-related risk, alongside ways to mitigate these risks, include:
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Key Question
What happens if a carbon project underperforms against forecasts?Detail
Under/non-delivery could occur due to a number of reasons including unavoidable losses (e.g. natural catastrophe); avoidable losses (e.g. abandonment & insolvency or fraud & negligence); or carbon losses (change in methodology or insolvency of the standard).Who might need this cover
Those investing into a project and seeking a return on investment (cash or carbon credits).Buyers who are pre-purchasing carbon credits (ex-ante) and are waiting upon their delivery.
Project Developers who must deliver credits to meet a pay-on-delivery contract.
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Key Question
Are you concerned about a reversal occurring after a credit has been issued?Detail
Reversals can happen across all types of carbon. For example nature-based solutions could face natural catastrophe, and engineered solutions could suffer leakage of carbon stored underground. Project developers might be required to make good this reversal, Carbon Standards might suffer losses from their buffer, and end users might question the integrity of their claims.How can Kita help
We can provide risk management solutions for Carbon Standards who may be concerned about the impact of a significant reversal on their buffer pool, or who wish to provide solutions for Project Developers for managing their own reversal risk. -
Key Question
Do you rely on other parties as part of this transaction? Are you concerned about their actions?Detail
This risk can be broken down into three segments: Implementation, Financial and Contractual.Implementation (abandonment, fraud, negligence, non-delivery of credits)
Financial (non-payment on delivery, insolvency)
Contractual (breach of contract)
Who might need this cover
Investors, buyers, and intermediaries will rely on a counterparty to receive their credits. Likewise, a project developer may rely on a counterparty to successfully implement their project. Insurance can help mitigate these counterparty risks. -
Key Question
Are you concerned that a future event will lead to the invalidation of the project?Detail
For example, the project is invalidated due to a fraudulent or negligent act, a significant reversal of carbon dioxide back into the atmosphere or a significant shift in methodology.How Kita can help
Kita can advise on these risks within different projects - stemming from wider counterparty and reversal considerations - and guide clients towards appropriate risk mitigation solutions. -
Key Question
Are you concerned about changes to law or regulation at an international/governmental/national/subnational level which might result in a loss of of your carbon credits?Detail
This may relate to traditional political risks, such as war or terror, or carbon related risks, in particular for Article 6 markets.Who might need this cover
This has the potential to impact all parties within the carbon markets. -
Key question
Are you worried about your price exposure to carbon, particularly how you might be required to replace credits lost with higher priced credits in the future?Detail
For companies that trade or invest in carbon credits, market prices can be turbulent. For companies that use carbon credits to meet net zero targets, price poses a wider risk. If a corporate is forced to replace carbon credits due to invalidation, it takes on a potentially uncapped future liability by being forced to replace those credits at unknown future prices.How Kita can help
Kita does not insure price risk directly, however our insurance products can help to cap your exposure to these risks to enable more certainty in financial management.
Kita offers a range of risk management solutions and risk advisory services that cover all different risk profiles and climate strategies
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Carbon Purchase Protection Cover
Insurance coverage for delivery risk
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Abandonment and Insolvency
Insurance coverage for counterparty risk
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Buffer Depletion Protection Cover
Protecting Carbon Standards’ buffers against depletion
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Carbon Political Risk Cover
Insurance for Political and Host Country Risks
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Buffer as a Service
Risk management for Carbon Standard Buffers
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Risk Assessment
Risk assessment across key risks and insurability criteria
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Portfolio as a Service
Assess, manage and mitigate risk across your carbon portfolio
“Risk transfer solutions…are financial shock absorbers, reducing a company’s potential financial loss if a risk manifests and smoothing its experience in volatile conditions.”
- CREO, “An Introduction to Risk Transfer Solutions for Climate Projects”
Carbon or cash? Choose how your claims get paid
Uphold your commitments with the option to receive like-for-like replacement carbon credits in the event of an insurance policy claim.
We give you the flexibility to receive compensation in cash or in carbon so that you can customise your insurance plan to suit your needs.
We are very proud to be amongst the first insurance companies offering the option for insurance claims to be resolved with either replacement credits or more traditional financial compensation.
Replacement carbon credits for eligible claims will be distributed from Kita’s proprietary Carbon Supplier Pool.
"To prevent the worst impacts of climate change, we must remove gigatons of CO2 from the atmosphere annually for the remainder of the 21st century.
This is a scale-up task at unprecedented speed, and it requires de-risking and access to capital for carbon removal solutions.
Insurance can act as a fundamental enabler."
NATALIA DORFMAN, KITA CEO AND CO-FOUNDER
Carbon Insurance — Working for you
Kita’s carbon insurance products protect buyers, sellers and intermediaries against a range of risks throughout the carbon lifecycle and across different project types.
By transferring risk off the balance sheet, more companies can access the carbon credit market – securing high integrity climate strategies without high risk, while scaling the carbon solutions that the world needs.
Put simply - If your carbon credits underperform, Kita covers your loss.
Kita helps de-risk carbon purchases by:
Providing additional due diligence and fraud checks
Offering independent quality assessment
Enabling a lower cost of capital
Increasing internal rate of return
Providing budget certainty for carbon purchasing
Reducing carbon market price risk
We shift “high risk investment” to “standard process purchase.”
What can carbon insurance offer?
The ability to lock in preferred pricing and secure supply, safeguarding climate commitments
Confidence that strong due diligence and risk management is in place
Reduce risk on your balance sheet
Enable improved financing terms
Flexibility in how eligible claims are settled: opt for cash or replacement like-for-like carbon credits
In a rapidly moving environment, you can gain a competitive advantage with confidence.
As with all insurance policies, terms, conditions and exclusions will apply.
Kita is a proud member of:
