Carbon credit insurance company Kita Earth has made its entrance into the Canadian market, offering reliable carbon insurance policies for carbon removal credits. This means that Canadian investors and buyers can now utilize Kita’s Carbon Purchase Protection Cover to insure their forward-purchased carbon credits. The insurance product not only protects against delivery risk but also encourages more investment in high-quality carbon projects.
Kita Earth, a UK-based startup, is the world’s first carbon insurer, established in December 2021. Its primary objective is to minimize uncertainties in purchasing carbon credits and promote the growth of carbon credit markets. In cases where the carbon credits fail to deliver the promised results, Kita’s insurance covers the buyer’s loss. This innovative solution provides a critical safeguard for companies and organizations seeking to offset their carbon emissions.
The importance of insuring carbon credit purchases lies in the global effort to combat climate change. Achieving net zero emissions requires massive investment in carbon dioxide removal (CDR). However, there is a risk associated with pre-purchasing carbon credits, as there is no guarantee of delivery. This risk has deterred significant innovation and investment in carbon removal projects. Kita Earth aims to address this issue by providing insurance coverage for forward-purchased carbon credits, reducing uncertainty and promoting the growth of the carbon credit market.
The demand for carbon removal credits is increasing as businesses and governments worldwide strive to achieve their net zero emissions targets. Tech giants and national governments have shown support for removal credits by investing millions of dollars in these projects. However, most carbon removal projects are in the early stages and require significant capital injection to scale and deliver the necessary removal capacity. Corporate net zero pledges have further fueled the demand for carbon removal credits, with large companies supporting initiatives that generate them.
According to a report by BCG, the demand for durable CDR is projected to be between 40 and 200 million tonnes of CO2 per year by 2030. This represents a value of approximately $10 to $40 billion, with the potential to grow even higher to $135 billion by 2040. To meet this massive demand, investment in CDR must exceed $100 billion by 2030. However, the current supply of carbon removal credits is insufficient to meet the demand, leading corporations to engage in pre-purchased carbon credit deals to secure future supply and meet their net zero targets.
To safeguard these pre-purchased carbon credit deals, Kita’s Carbon Purchase Protection offers insurance coverage. By managing the risks involved in carbon credit transactions, Kita Earth attracts more investments into projects with a positive climate impact. The insurance policies provided by Kita are underwritten by London-based Lloyds, ensuring the credibility of their coverage for the Canadian market. This expansion builds on Kita’s existing insurance coverage for companies in the UK and the US, allowing Canadian buyers to invest in carbon credits with peace of mind, knowing that their purchases are protected while contributing to a sustainable and climate-positive future.