A project under-delivers, a wildfire reverses the sequestration, a host country pulls its Article 6 authorisation, and your client wears the loss with no recourse. These policies turn that exposure into a contractual payout, which is what makes a project financeable and a net-zero claim defensible.
Carbon credits carry delivery, permanence and regulatory risk that no conventional policy responds to. A buyer who paid for credits that never arrive has a contract claim against a developer who may not be there. Insurance moves that risk off the counterparty, which lets lenders advance against future credit sales, lets developers free up buffer pool credits as saleable inventory, and lets buyers stand behind the offsets they retire.
For credits that do not exist yet. Pays if a project delivers fewer credits than contracted. Four coverages, written together or selected: delivery failure, project failure, loss of utility and replacement costs. A 180 day waiting period after the due date lets the seller cure a shortfall before a claim pays, and a lender can be named loss payee.
Wraps credits already on the balance sheet or retired against cancellation by the registry, through reversal or invalidation, from any cause. Settles at the agreed price per credit or in replacement credits, and funds public relations support where a cancellation draws adverse media.
Carried in place of contributing credits to the registry buffer pool, under Verra’s insurance-backed alternative framework. The credits this frees up become saleable inventory. Covers natural, man-made and biological reversals, settled in replacement credits.
Covers non-repayment of principal and interest where a loan to a carbon developer is serviced by credit sales, including project performance failure for any reason. Protection to 90% of principal, limits to USD 26m, and structured to give regulated lenders Basel capital relief.
Satisfies the registry’s requirement for a guarantee against corresponding adjustment failure, which is what allows credits to be sold carrying the CORSIA label. If the host country revokes its authorisation, the policy funds replacement credits.
Forestry and improved forest management, including First Nations-led projects. Prairie soil carbon and grassland. Landfill gas, methane and refrigerants. Carbon removal: DAC, biochar, mineralization and enhanced rock weathering.
Corporates on multi-year forward offtakes against net-zero commitments. Air carriers with CORSIA obligations. Heavy emitters using offsets under the federal, Alberta TIER, BC and Quebec systems.
Bank sustainable finance desks, pension and private credit funds with climate mandates, public financiers, carbon traders and brokers.
How Carbon Credit Insurance responds to the questions brokers ask us most often.
It pays when the credits a project was expected to produce do not arrive, do not survive, or stop being usable. The main triggers are delivery shortfall and project failure, reversal or cancellation of issued credits, loss of utility where credits can no longer be used for their intended purpose, and lender non-payment where financing was advanced against the credits.
Reversal cover turns the loss into a contractual payout rather than a dispute with the registry or project developer. Where issued credits are reversed or cancelled within the policy terms, the insured is indemnified for the insured value of those credits, subject to the limit, retention and verification requirements in the policy.
Any of the three, depending on who carries the risk. Developers insure delivery and project performance, buyers insure the credits they have paid for or contracted to receive, and lenders insure repayment where credits are the collateral. Structures where more than one party has an interest are common.
It is frequently the piece that lets financing close. Lenders and offtakers discount carbon revenue heavily because delivery is uncertain. Moving that uncertainty to an insurer with a defined payout gives the financing party something it can underwrite, which is why the cover is usually bought at the point a project is being financed rather than after issuance.
Expect to provide the project design document or equivalent, the registry and methodology being used, the validation and verification status, the offtake or forward purchase agreements, and the delivery schedule being insured. The quality of the verification record is the single biggest driver of terms.
Yes. TerrAssure writes carbon credit insurance for Canadian brokers and their clients, alongside our environmental liability products. Projects on the major voluntary registries as well as compliance market projects can be considered.
Coverage described here is a summary. The issued policy wording governs in all cases. Ask an underwriter about a specific risk.
A carbon credit is a promise that a tonne of carbon stays where someone put it. Fire, fraud, and registry action can break that promise, and a new class of insurance is being built around exactly that.
Read article Company NewsTerrAssure Underwriting Solutions is now offering carbon credit insurance in Canada, with limits up to USD $40 million per project and terms up to seven years.
Read articleProtect your carbon projects, purchases and lending with dedicated carbon credit coverage.
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