As the climate crisis requires carbon removal solutions that can scale rapidly, one company offers insurance products that could support those solutions in their emissions reduction efforts.
Kita Earth Ltd is a startup established in December 2021 that is the world’s first carbon insurer. It ensures carbon removal credits that are often pre-purchased and carry execution risks, in order to reduce uncertainty and thus stimulate the growth of the carbon credits industry.
Relevant: Howden Group Creates First Insurance Against Fraud In Carbon Markets
The carbon removal industry suffers from a chicken and egg problem meaning it needs significant financing to scale at speed but at the same time this financing carries a risk that sometimes drives those investments away.
Due to a lack of supply and increasingly high demand, carbon removal credits are often pre-purchased. Carbon removal credits come with long timeframes and this brings the risk that they might not be delivered eventually.
The issue creates an environment of uncertainty, holding back carbon removal development and investments. Kita aims to reduce “carbon delivery risk” with insurance products that safeguard the quality and performance of carbon purchases.
Relevant: Climeworks Wins A New Client – One Of UK’s Largest Insurers
Kita’s 1st product is Carbon Purchase Protection Insurance which protects buyers of forward-purchased carbon removal credits against under-delivery. If the carbon removal credits underperform, Kita covers the loss of insurance purchasers. The insurance product is aimed at carbon credit buyers and is launching in January 2023.
According to the startup, the reduced risk of carbon transactions allows carbon removal solutions to access greater flows of consistent capital to scale their impact faster. As a result, the world could reach its CO2 removal targets quicker and facilitate those solutions that hold a chance in combating climate change.
