CFC, the specialist insurance provider, pioneer in emerging risk and market leader in carbon insurance, has today announced that it is one of the first private insurers to be approved to offer insurance policies that support the eligibility of carbon credits under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
CORSIA is a global initiative by the International Civil Aviation Organization (ICAO) designed to limit carbon emissions from international flights. Now into its first phase, airlines from participating states are required to offset a portion of their carbon emissions occurring between 2024 and 2026. From 2027, CORSIA will become mandatory for most ICAO member states.
CFC’s CORSIA Guarantee Insurance (CGI), has been approved by Gold Standard as an insurance solution under the first phase of the CORSIA scheme. Insurance is one of two routes available to project developers to ensure their credits are eligible under CORSIA.
The insurance covers the risk that corresponding adjustments are not applied. A corresponding adjustment is an accounting mechanism under Article 6 of the Paris Agreement. It ensures that when carbon credits are transferred internationally, the emission reductions are only counted against one target. The failure of this process is a form of sovereign political risk.
“Project developers have faced huge challenges in obtaining their compulsory CORSIA insurance coverage. There have been no commercially viable options available to-date, despite the great efforts of the World Bank,” says George Beattie, Head of Innovation at CFC.
CFC is extending its leadership in carbon insurance by delivering yet another insurance industry first - this time providing critical compulsory insurance to projects looking to provide supply to the CORSIA scheme. George Beattie, Head of Innovation
CFC has positioned itself as a leader in carbon insurance over the last 18 months, launching several industry-first products and facilitating some of the largest carbon deals in history including unlocking a USD 200m debt facility provided by JP Morgan to Chestnut Carbon – a US based project developer.
“This is yet further evidence of the role that the insurance industry can play in facilitating not just the financing of high-quality carbon credit projects themselves, but also in delivering solutions to enable the practical implementation of industry-wide carbon reduction schemes,” concludes Beattie. ”I truly believe this initiative will act as a litmus test and we will see similar schemes rolled out across other industry sectors in the years ahead as the climate crisis continues to worsen. Despite widespread short term political denial, it is the defining challenge of our time.”
The assessment of CFC’s carbon credit insurance policy was carried out by Howden Group, appointed by Gold Standard to evaluate submissions from insurance providers against robust criteria established by Gold Standard.
