Carbon Credits Reversibility Insurance

Problem

• The impact & quality of carbon removal projects & their corresponding carbon credits can be measured using many frameworks. This is one of them: Additionally, Measurable, Permanent, Scalable (there is a nice graphic at the bottom of the article on reversibility estimates for various carbon removal projects)
• Some carbon removal projects like planting trees or improving farming practices have high reversibility risks. Hence the carbon credits of these projects are of inferior quality to things like DAC (direct air capture) which are highly non-reversible.
• There is an undersupply of the highest quality carbon credits.

Idea

• It would be cool to insure carbon removal projects with high reversibility risk against accidental reversal. E.g. using open-source data, user-generated data, satellite data + drones/image analysis for claims management.
• Insurance payout would not be to the customer but would go directly into high non-reversible carbon like DAC.
• This way you’d have a rolling fund for the best, most expensive but most promising carbon capture projects provided by the insurance fees, which would be a good thing.

Thoughts

• Insurance companies already insure against the climate/weather/fire. There’s even a YC startup that insures against climate change directly: Plover Parametrics https://plover.insure/
• Companies that monitor carbon removal projects exist
• Pachama - verifies forest carbon projects using ML and remote monitoring
• Sylvera - Standardize Certifications & add satellite data to make projects comparable
• Probably you could get reinsured or maybe even piggyback off existing climate/weather/fire hazard models & add the components which are specific to project type (trees - destruction by pests/animals/?; mangroves - tsunami or oil leaks?)
• Some project types are probably really hard/too risky to insure: e.g. sustainable farming practices that can be reversed by a single bad actor: https://www.klim.eco/, https://nori.com/, https://buildgrassroots.com/, https://www.indigoag.com/