CFC, an insurance provider with a focus on carbon-related risks, has announced its approval as one of the first private insurers authorised to issue policies that support the eligibility of carbon credits under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
CORSIA, developed by the International Civil Aviation Organisation (ICAO), is a global initiative aimed at controlling carbon emissions from international air travel.
During its first phase (2024–2026), participating airlines must offset a portion of their emissions. From 2027 onward, participation will become mandatory for most ICAO member countries.
CFC’s CORSIA Guarantee Insurance (CGI) has been approved by Gold Standard as a recognised insurance solution for the first phase of the scheme. Under CORSIA, insurance is one of two options available to project developers to confirm their credits’ eligibility.
The policy protects against the risk of “corresponding adjustments” not being applied—a process outlined in Article 6 of the Paris Agreement that ensures emission reductions are not double-counted when carbon credits are transferred across borders. Failure of this process is considered a form of sovereign political risk.
“Project developers have faced huge challenges in obtaining their compulsory CORSIA insurance coverage. There have been no commercially viable options available to-date, despite the great efforts of the World Bank,’ added George Beattie, Head of Innovation at CFC.
“CFC is extending its leadership in carbon insurance by delivering yet another insurance industry first – this time providing critical compulsory insurance to projects looking to provide supply to the CORSIA scheme.”
Over the past year and a half, CFC has expanded its role in the carbon insurance market by introducing several first-of-its-kind products and facilitating some of the largest carbon-related financial transactions, including a USD 200 million debt facility from JP Morgan to US-based project developer Chestnut Carbon.
“This is yet further evidence of the role that the insurance industry can play in facilitating not just the financing of high-quality carbon credit projects themselves, but also in delivering solutions to enable the practical implementation of industry-wide carbon reduction schemes,” said Beattie.
“I truly believe this initiative will act as a litmus test and we will see similar schemes rolled out across other industry sectors in the years ahead as the climate crisis continues to worsen. Despite widespread short term political denial, it is the defining challenge of our time.”
The review of CFC’s carbon credit insurance policy was conducted by Howden Group, which was appointed by Gold Standard to evaluate insurer submissions based on the organization’s established criteria.
