Carbon Reversal Insurance


Beat Krauer

15th Dec 2023



Meaningful carbon removal is carbon removal that lasts centuries or longer. In the carbon market, once a credit is used to offset a ton of emissions, it is retired (see “Carbon markets: explained). But the sequestered CO2 may later – or even before retirement – be inadvertently re-released into the atmosphere, through forest fires, logging, or failure of sequestration techniques. If it is re-released after retirement, then a buyer who has invested in that credit hasn’t gotten what it paid for – and its progress towards net zero, and its reputation, is negatively impacted.

CarbonPool offers both carbon credit end users and carbon credit producers protection from unexpected reversal events – above and beyond the limited solutions in place. And whereas we currently do not insure against carbon avoidance shortfalls, we do offer protection for reversals of some retired avoidance credits.

A key feature of our reversal coverage is monitoring for reversal events on a regular basis, offering benefits to our clients but also to the environment more broadly, as quick detection of potential reversals can aid mitigation. Insurance companies have long used independent, remote, real-time monitoring of weather for products such as crop insurance, employing satellite imagery, geothermal imaging, weather data, and remote soil monitoring to scan for weather events that might dampen crop yields. When applied to carbon sequestration, these technologies allow us to notify producers as soon as a reversal event is identified, allowing them to act quickly to try to mitigate the impact.

Our reversal insurance is available to holders of certified carbon removal credits, holders of retired carbon removal or, in some cases, avoidance credits, and producers of carbon removals.

We estimate reversal insurance will cost less than 1 percent of the value of the insured carbon credits, with annual premiums for annual coverage. Payouts are in removal credits that are additional, measurable, verifiable, and permanent.

We believe insurance may be an appropriate solution to the problem of avoidance reversals when it is possible to establish a reasonable baseline.