Howden, the global insurance and reinsurance broking group, has been appointed by Gold Standard to approve insurance policies that support the eligibility of carbon credits for the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
CORSIA is an initiative developed by the International Civil Aviation Organisation (ICAO) to reduce carbon emissions in international aviation. It integrates emissions reductions into its operational framework, requiring airlines to purchase carbon credits for their emissions above a certain baseline.
Howden noted, “Offsetting is crucial in aviation because it compensates for emissions that are challenging to eliminate. At the same time, CORSIA incentivises the use of sustainable fuels through methodologies that allow for reductions in offsetting requirements.”
All international carriers taking part in CORSIA must legally offset increases in emissions using either approved carbon credits or sustainable aviation fuels. The first phase of the scheme has strict requirements to prevent double counting between CORSIA and national targets. Several approved standards, including Gold Standard, recognise that insurance can be an effective way to manage this risk.
This partnership represents a significant step in scaling carbon markets and de-risking investments in climate action. A new insurance assessment process will give carbon offset project developers better access to a wider range of insurance products, supporting the eligibility of credits for use under the first phase of CORSIA, covering 2024 to 2026.
Howden will take on an independent role in overseeing which insurance policies meet the criteria set by Gold Standard. The policies approved can be used by project developers to insure against political risks linked to carbon credits.
Charlie Pool, Head of Carbon Markets, Climate Risk and Resilience, Howden, said: “This collaboration marks an important step for carbon markets. By broadening access to insurance products and reducing risks, the partnership will provide additional security, through independent verification, helping buyers purchase with confidence and in compliance with internationally recognised standards.
“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. 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.”
Margaret Kim, CEO, Gold Standard, added: “To enable climate action for people and nature, we need to broaden access to new and growing markets, including CORSIA. 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.”
