Oka has announced its foray into the compliance carbon market with a new insurance solution named Corresponding Adjustment Protect.
This product aims to safeguard against the risk of losing Article 6 authorisation of the Paris Agreement due to non-implementation of Corresponding Adjustments by the host country.
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Article 6 facilitates international collaboration to achieve climate objectives and supports financial aid for developing nations.
It allows nations to transfer carbon credits they have earned by reducing their greenhouse gas emissions to assist one or more other nations in meeting their climate commitments.
Corresponding Adjustment Protect is underwritten by Oka Syndicate 1922 at Lloyd’s and designed to instil confidence in buyers by mitigating risks associated with the delivery of Corresponding Adjustments.
DelAgua, which has secured letters of authorisation from the Government of Rwanda for clean cookstove projects, is the inaugural developer to utilise this insurance solution.
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By GlobalDataThe policy is a response to the evolving needs of carbon markets and aims to satisfy the International Civil Aviation Organization’s criteria for the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
The insurance offering not only addresses concerns over the delivery of Corresponding Adjustments but also seeks to expand the market, enabling larger scale carbon-funded initiatives that benefit impoverished communities and the environment.
Oka’s Corresponding Adjustment Protect offers protection to both buyers and sellers in the event of Article 6 revocation due to a failed Corresponding Adjustment.
The Corresponding Adjustment is an essential accounting mechanism to prevent double counting of credits in international transfers and is a mandatory requirement for voluntary credits in compliance markets, including CORSIA.
Should a host country fail to make the necessary adjustments or retract prior authorisation, the insurance provides financial compensation to the credit holder.
Oka founder and CEO Chris Slater said: “We are excited to be the world’s first insurance provider to underwrite Corresponding Adjustment failure, the chief unaddressed risk facing buyers and sellers in the burgeoning compliance markets.
“In Corresponding Adjustment Protect, Oka alleviates due diligence on buyers and the burden of proof for developers. In so doing, we aim to accelerate confidence in and the climate impact of this promising market.”
In March, Oka, headquartered in the US, attracted investment of $10m to propel its next growth stage.
The investment round was led by companies such as Aquiline Capital Partners, firstminute capital and Overview Capital, which focuses on climate solutions.
