Gold Standard has appointed Howden to review insurance policies backing carbon credits used under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), a step intended to expand access to cover and reduce risk in carbon markets.
Operating independently, Howden will evaluate whether insurance products meet the eligibility criteria set by Gold Standard, one of the certification bodies recognised under CORSIA.
The scheme, developed by the International Civil Aviation Organization (ICAO), requires airlines to offset growth in international aviation emissions above a set baseline through certified carbon credits or sustainable aviation fuels.
The new process is expected to widen the range of insurance products available to project developers and support the use of eligible credits during the scheme’s first phase, running from 2024 to 2026. Political risk cover is seen as a key component in ensuring the credibility and reliability of credits and is recognised by several accredited standards, including Gold Standard.
According to Howden, the partnership is intended to strengthen market confidence and provide buyers with additional security through independent verification. It may also help attract more institutional capital by offering greater clarity and reducing uncertainty around project risks.
“This is a perfect example of how embedded insurance enhances carbon market integrity, in this case supporting the aviation energy transition by allowing the issuance of credible carbon credits and facilitating compliance with CORSIA,” said Charlie Pool, head of Carbon Markets, Climate Risk and Resilience at Howden.
“The new insurance process will also allow more institutional capital, which was previously held back, to flow into the market, setting an exciting precedent that can be replicated elsewhere to unlock the full potential of carbon markets,” Pool added.
CORSIA applies to most international commercial flights between participating countries and includes safeguards to avoid double counting between international and national targets. Insurance is viewed as one route to address that risk.
Margaret Kim (pictured above), CEO of Gold Standard, said that recognising insurance through a formal assessment process would help enable more projects to supply eligible credits to the market.
“By recognising insurance policies through a rigorous assessment process and allowing their use to address political risk, we can enable more projects to supply credits for CORSIA's first phase, in a way that is credible, reliable and based on solid foundations,” she said.
