Isometric, Marsh launch insurance framework for reforestation carbon projects. (Photo: Magnific)
Isometric has introduced an insurance framework developed with global insurance broker Marsh that allows reforestation project developers to reduce their contributions to carbon credit buffer pools, potentially improving project revenues.
Insurance offers alternative to buffer pool contributions
Announced on October 20, the framework allows developers of Isometric-certified reforestation projects to use insurance to replace part of their buffer pool contributions.
Buffer pools are reserves of carbon removal certificates set aside to cover potential reversals, such as carbon losses caused by wildfires or disease. They are designed to protect certificates already delivered to buyers if a project loses previously stored carbon.
By reducing the number of certificates allocated to buffer pools, developers may retain more revenue during the early years of a project, when financing and operating costs can place pressure on project economics.
Five insurance providers—Artio, CarbonPool, CFC, Kita and Oka—have been approved under the framework to offer coverage to Isometric-certified reforestation projects.
“Reforestation developers now have the option to reduce their buffer pool contributions,” said Lukas May, Chief Commercial Officer at Isometric.
May said the framework is intended to give developers greater financial flexibility while maintaining safeguards against carbon removal reversals.
Bruno Figueiredo, VP of Finance at reforestation project developer Mombak, said insurance could provide buyers with greater certainty while allowing developers to manage reversal risks more efficiently.
Insurance providers could expand beyond reforestation
Under the framework, participating developers can obtain insurance that meets Isometric's requirements. Additional insurers can also apply for approval.
Hema Mistry, CEO of FINPRO UK at Marsh Risk, said the framework establishes requirements for using insurance alongside existing buffer mechanisms.
Marsh sees carbon insurance as part of the broader infrastructure needed to manage risks in carbon markets, potentially supporting project financing and investment.
Isometric said it is also exploring whether the insurance framework could be extended to other carbon removal pathways beyond reforestation.
