The World Bank’s insurance branch is working on plans to protect carbon offsetting projects against political risks in developing countries as a growing number of governments seek to impose new rules onto the market.
The Multilateral Investment Guarantee Agency (Miga) plans to gain an expanding role in providing insurance cover to carbon credits projects in a bid to facilitate large-scale investment in countries considered as high-risk.
The agency’s entrance into the carbon market comes as several developing nations are moving to regulate or restrict the trade of credits generated within their borders.
The disruption has scared project developers and investors in the $2 billion voluntary market. Hailing mostly from rich nations, they have been profiting from activities like planting or protecting trees in developing nations and selling on the resulting credits.
Carbon credits are used by governments, companies or people to compensate for the greenhouse gas emissions they generated themselves.
A Miga spokesperson explained, as governments around the world are starting to regulate carbon markets, the agency will be able to protect investors against risks of governments breaching agreements.
The ‘greening of Miga’s portfolio is spart of a broad set of reforms which could give the
World Bank a much bigger role in enabling climate finance.
www.climatechangenews.com/2023/06/08/world-bank-set-to-take-on-risk-of-insuring-carbon-credits-amid-market-upheaval/