International insurance broker Howden has launched a voluntary carbon credit insurance product in partnership with Respira International and Nephila Capital.
Respira and Nephila were advised by climate risk finance company Parhelion during the development of the product. It was incubated through the product innovation work stream on the Insurance Task Force of the Sustainable Markets Initiative, an initiative led by His Royal Highness The Prince of Wales.
The product aims to provide a layer of security for buyers of carbon credits, to build a greater level of certainty that the credits are removing the stated volume of carbon.
According to Howden, the Voluntary Carbon Market (VCM) will play a vital role in the transition to a low-carbon future. The company pointed to various estimates that suggest that the market for carbon credits could be worth between $20bn and $50bn by 2030.
Trading turnover of the VCM has increased steadily over recent years to just under $2bn in 2021, Howden added. A total of 60% of Fortune 500 companies have now set climate targets and these commitments point to substantial increases in demand for voluntary carbon credits.
Charlie Langdale, head of climate risk and resilience at Howden, said, “For the voluntary carbon market to grow to $50bn by 2030, buyers need to be able to trust that the carbon credits they are buying are removing the promised volume of carbon from the atmosphere.
“The added layer of security provided by this product, combined with independent verification from established, reputable bodies will help buyers to purchase with confidence and should drive more buyers towards high-quality projects like those in Respira’s portfolio.”
Ana Haurie, Co-founder and CEO of Respira, added, “The voluntary carbon market is an essential piece of the puzzle if we are to reach net zero. Respira is committed to improving integrity and transparency in the market and this product will appeal to the many corporates and financial services companies who wish to engage in buying high-quality carbon credits as part of their own pathways to net zero and carbon projects keen to provide buyers with the highest assurance. This will enable much needed capital to be channelled into high-quality carbon projects on the ground.”
Berlin-based GreenTrade recently closed its pre-seed round, as it builds its blockchain-based marketplace for carbon credits and impact claims.
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