Insurance broker launches world’s first carbon credit warranty policy
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The Howden Group, an insurance broker, announced it played a role in developing the first-ever warranty and indemnity policy for carbon credits. This initiative aims to build trust within the market.
The first buyer of this policy is the British firm Mere Plantations. They have applied it to 300,000 credits obtained from a project in Ghana. This project’s goal is to rehabilitate 10,000 acres of degraded land within the Afram Headquarters Forest Reserve.
Carbon credits originate from projects that either prevent or reduce carbon emissions. They are crucial in aiding companies in achieving Net-Zero goals while funding conservation and carbon reduction projects.
This first project is projected to eliminate 2.9 million tonnes of carbon dioxide from 2011 to 2031.
“We are using a market-based mechanism to write those bars to quality into legal language,” Charlie Pool, head of carbon insurance at Howden, told Reuters. “We are using a regulated industry to bring in the governance and regulation the market lacks.”
Howden’s policy aims to protect against fraud at the project level, providing certainty regarding the production of credits. This is anticipated to enable project developers to command higher prices for their credits.
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