Global insurance intermediary group Howden has placed the first Carbon Credits Warranty and Indemnity (W&I) insurance policy, marking a significant development in the voluntary carbon market.
This policy provides coverage for the sale of carbon credits generated by Mere Plantations’ reforestation project for degraded forest areas in Ghana, West Africa.
Mere Plantations, headquartered in Britain, owns and operates a teak plantation in Ghana and “is endorsed by a leading managing general agent (MGA)”.
The introduction of the W&I policy aims to increase the confidence and perceived quality of carbon credits.
This Carbon Credits W&I Policy aims to catalyze investments in the carbon market by ensuring the integrity and value of the credits.
This policy allows Mere Plantations to assure buyers that their credits meet the required standards of environmental, social and financial due diligence, and that their provenance is assured.
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Furthermore, the policy enables project developers to leverage the underwriting expertise of the M&A insurance market, building confidence in the methodology and execution of the carbon credit projects.
Howden says buyers are purchasing the credits at a higher price than other reforestation projects due to the extra protection and “high quality” of the credits, with British logistics company Uniserve being the first buyer.
Gary Cobbing, Chief Commercial and Operating Officer of Uniserve Group, said: “The transparency and certainty provided by the additional insurance policy further enhances our confidence in this partnership and we look forward to witnessing the impact this development has on the carbon market.”
Howden’s previous ventures into the carbon market include the launch of the first voluntary carbon credit insurance product in 2022 and the rollout of an insurance product in January 2024 covering carbon dioxide leakage from carbon capture and storage facilities.
Howden Carbon Insurance head Charlie Pool said: “With insurance that guarantees the credibility of carbon credits, this product will ensure credits become more valued and encourage further project development.
“By addressing the lack of trust and transparency, this innovative policy introduces a much-needed structural improvement and represents an important step forward for customers.”
