World’s first carbon insurer launches

Kita, the world’s first carbon insurer, has launched, raising £350,000 in pre-seed round led by Insurtech Gateway, alongside investors Carbon13, Climate VC and Echelon Capital.

The insurer’s focus is carbon removal, insuring “carbon delivery risk” to enable carbon removal solutions to scale. Increased buyer trust in carbon delivery leads to greater flows of capital to help carbon removal projects grow.

By introducing insurance to reduce those risks, it is hoped carbon removal projects will command a higher price and attract inward investment.

“The world is in a climate crisis, and carbon removal is an essential part of the solution,” said Natalia Dorfman, Co-founder and CEO, Kita. ”However, carbon removal is new, faces unique risks, and lack of insurance to address these risks is holding back development at the rate the world needs.

”Kita believes insurance is a crucial enabler - by removing risk and increasing trust in the market, insurance will help drive capital to help quality carbon removal projects scale.” 

Trillion dollar opportunity

The Intergovernmental Panel on Climate Change has called for nations to remove billions of tons of CO₂ annually for the remainder of the 21st century to enable a liveable and sustainable future. 

Currently, annual emissions from human consumption of oil and gas products is 20 billion tons. According to Kita, if it takes a trillion dollar oil and gas industry to emit 20 billion tons of CO₂, then a trillion dollar carbon removal industry will be needed to remove that same amount by 2050. 

”This is a scale-up task at unprecedented speed and magnitude, and it represents a huge opportunity for a new insurance market,” it said in a statement. “Likewise, insurance is essential to enable this rate of growth. This can’t happen soon enough.”

Most carbon removal solutions generate revenue via selling carbon units on the voluntary carbon market, which needs to grow more than 15-fold by 2030 to support delivery of net zero targets.

Challenges within the voluntary carbon markets include lack of transparency and consistent risk management, leading to significant transaction risk - pre-sold carbon units have a risk of being underdelivered. This uncertainty leads to inefficient flows of capital to high-quality carbon removal projects.