Tokio Marine Kiln (TMK) an insurer in the UK market has joined forces with carbon credit insurance specialist Kita to offer Political Risk insurance for developers and investors in carbon credit projects.
Under the leadership of Ed Parker, Head of Special Risks at TMK, the new product is designed to protect project developers and their investors against risks such as confiscation, nationalisation, forced abandonment, license cancellation, and political violence.
According to TMK, the insurance will cover losses for both parties if the host country of a project revokes agreements that allow the credits to be used in external offsetting strategies.
TMK, in its press release, said that with rising political volatility in many regions, carbon credit projects are at increasing risk from geopolitical developments that impact their ability to sell credits.
“This new product is intended to mitigate these evolving risks, providing much-needed certainty for investors and engender confidence in the voluntary carbon market. The availability of cover will also increase the viability of new projects and enable new, high-quality projects to proceed, with the rigorous assessment provided by Kita and TMK,” the press statement said.
Ed Parker, Head of Special Risks at TMK, said, “Increasing political instability is impacting projects designed to produce carbon credits. This issue is even more pertinent now as so many industries are facing increasing regulation around their offsetting and developers simply cannot afford to keep investing in the creation and maintenance of projects if they won’t be able to sell the credits when they are revoked. Our partnership with Kita will provide much-needed security against these risks and make the development of carbon projects more sustainable long-term.”