Carbon credit insurance specialist Kita has joined forces with carbon markets expert ClearBlue to improve the precision of carbon insurance models.  

The move is expected to transform the VCM by providing stakeholders with improved data, transparency and risk mitigation solutions for the procurement, valuation and management of carbon credits.  

It aims to instil greater confidence in market transactions by integrating ClearBlue’s carbon market analysis with Kita’s insurance solutions. 

ClearBlue has utilised its technology platform, ClearBlue Vantage, to review hundreds of nature-based project methodologies, including improved forest management and afforestation, reforestation and revegetation, to assess delivery risk.  

The findings are now incorporated into Kita’s underwriting model for its core product, Carbon Purchase Protection Cover (CPPC), enhancing the company’s ability to precisely address delivery risks associated with carbon credit transactions. 

Kita highlighted that ClearBlue’s delivery risk assessment (DRA) can mitigate exposure to project failures and discrepancies in estimated credit volumes versus issued volumes, a critical factor for investors and managers of carbon project development.  

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The DRA, powered by Vantage technology and refined through collaboration with investors and financial institutions, considers various parameters such as registry, location and project type, and uses historical data to quantify project delivery risk. 

Launched in February 2023, Kita’s CPPC is an insurance product for lenders, buyers and investors of forward-purchased carbon credits, covering delivery failure, shortfall, and in certain cases, delays due to counterparty risk, changes at carbon standard/methodology level natural and catastrophes. 

The latest alliance addresses both analytical and risk management aspects of climate goal adherence through voluntary carbon credit investments.  

It also enhances transparency of the VCM and represents a significant step in supporting companies investing in critical carbon projects by adding an extra layer of risk mitigation to their investments. 

Kita co-founder and chief technology officer Paul Young said: “Modelling the risks of early-stage projects relies on analysing historical activities and their outcomes. It necessitates not only an expert understanding of the development process but also the technology to extract this data from deep within the documentation.  

“Our partnership with ClearBlue has addressed this challenge, aiding Kita in developing insurance to support projects during this critical phase.”