Isometric has launched a new insurance framework that lets Reforestation project developers use insurance to reduce their buffer pool contributions, improving project economics. The framework was co-developed with global insurance broker Marsh.
Insurance and buffer pools
Buffer pools are reserves of carbon removal certificates that projects contribute to as a safeguard against reversals, where the carbon removed is released back into the atmosphere, such as through fire or disease. The pool enables losses to be covered without affecting the certificates already delivered to buyers.
By using insurance in place of a portion of their buffer pool contribution, project developers can see a valuable increase in take-home revenue in the early years of their projects. This gives developers more flexibility without compromising on the safeguards that ensure every certificate buyers retire represents a tonne of carbon removed from the atmosphere.
Artio, CarbonPool, CFC, Kita, and Oka have been approved under the framework, and are now able to offer insurance to Reforestation projects certified by Isometric.
Bruno Figueiredo, VP of Finance at Reforestation project developer Mombak, said: “This initiative led by Isometric is an important step toward a more mature carbon market, bringing proven risk-management solutions from established markets into the industry. Insurance has the potential to provide buyers with greater certainty and predictability while enabling a more efficient approach to managing reversal risk.”
Hema Mistry, CEO, FINPRO UK, Marsh Risk, said: “We are pleased to have supported Isometric in developing this insurance requirements framework, an important step forward that sets a clear pathway for using insurance alongside buffer mechanisms. This framework is part of Marsh’s strategy to embed carbon insurance into core carbon market infrastructure—helping project developers scale high-quality projects while giving buyers, lenders, and investors greater confidence in the market as a whole.”
Participating project developers can secure insurance that meets Isometric’s requirements, and additional insurance providers not included in this initial list can apply to be added over time.
Getting started
Project developers interested in using the framework can get in touch with Isometric to find out more. Isometric is also exploring extending the approach to additional pathways beyond Reforestation.
