CarbonPool is set to be the first insurance company in the world with a carbon credit balance sheet. The firm announced the closure of a $12 million funding round on Jan. 29.
Many firms depend on carbon credits to achieve their net zero goals. But after considerable turbulence in carbon credit markets, credit integrity, proper risk underwriting and certainty of outcomes are more important to reassure investors, regulators, and other stakeholders that these promises represent real environmental gains.
CarbonPool helps society reach net zero by offering in-kind insurance for failure to meet net zero commitments due to shortfalls, reversals, business interruptions and natural disasters that either reduce the amount of carbon dioxide removals contracted for or unintentionally add CO2 back into the atmosphere.
The team include insurance experts, climate scientists, weather modellers, geographers, and engineers assess each risk meticulously to construct customized risk models. Premiums gathered from each client, combined with CarbonPool's capital, are invest into high-quality carbon removal projects, to enable claims payments in-kind.
Coenraad Vrolijk, co-founder and CEO of CarbonPool, said, “CarbonPool’s in-kind payments make it unique among insurers in not only offering protection to holders of carbon credits in cases of natural disaster or technology breakdown but also in providing a guarantee that carbon credits live up to their promises, giving purchasers certainty and ensuring that they can meet their net zero goals.”
CarbonPool‘s team include insurance experts, climate scientists, weather modellers, geographers, and engineers. (Photo: CarbonPool)
The funding round was co-led by Heartcore Capital and Vorwerk Ventures, and included HCS Capital, Revent Ventures and former key members of Allianz, Christof Mascher and Axel Theis.
Christian Jepsen, a founding partner at Heartcore, noted, “Insurance represents 5-10 percent of the revenue of most mature markets, yet it has only just begun to touch carbon trading. This is a space that desperately needs the credibility that established financial controls like insurance can offer.”
CarbonPool is currently in the process of applying for an insurance license in Switzerland, and the company is already offering assessments and pre-underwriting agreements to clients, including corporations, institutional investors, and carbon removal developers.
The team is also in talks with government bodies, including the United Nations and the State of California, exchanging perspectives on how insurance can solve some of the industry’s main challenges, such as securing the permanence of carbon removals from the atmosphere.