It has been another sprint here at Oka as we launch our newest insurance solution, Corresponding Adjustment Protect™. Please read our latest newsletter to learn about this exciting news and more. And we’re only halfway through the year!

Introducing Corresponding Adjustment Protect™

Back in 2016, the UN and its 193 member states introduced the first mandatory offsetting scheme for the private sector — and set a 21st Century Bretton Woods moment in motion.

Under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which opened this year and takes full effect in 2024, international airline operators will be required to compensate for unavoidable emissions with authorized carbon credits.  

That’s a lot of authorized carbon credits. 

If the airline industry were a country, it would be among the six highest emitters globally. Most of its emissions are unavoidable. CORSIA redirects all of that consumption away from the dwindling carbon budget and towards the carbon markets.   If airlines do not comply with CORSIA, they may face several consequences including steep regulatory and financial penalties, as well as operations and business restrictions.  

As such, it represents a transformative opportunity for voluntary carbon market (VCM) project developers who qualify to sell into CORSIA. The $100 million question with which the market has been grappling, however, is who — or what — bears the burden of proof for ‘eligibility’?

To meet the standards set by the international community, registries must ‘guarantee’ that the credits they issue comply with Article 6. In recent weeks, Verra, Gold Standard, and the American Carbon Registry have, in turn, all indicated that project developers issuing credits without existing corresponding adjustments  will need a third-party guarantee mechanism — namely, carbon insurance. 

Compulsory insurance is a long-overdue and landmark development for the VCM. Risk pricing and transfer is a pillar of every well-functioning industry, mobilizing investment and innovation and — when ubiquitous, as in the case of home and auto insurance — catalyzing scale. In the VCM, mandatory insurance will lower contract and balance sheet risk for buyers, accelerate due diligence cycles for sellers, and bring liquidity to climate projects. 

These new CORSIA-related requirements are therefore a gateway to growth, not just for the VCM and climate action but also for the insurance industry and Oka. Compulsory insurance from September will further unlock demand, and we see it as a signal of how the broader carbon market will develop over time. 

Which is why, following months of engagement and collaboration with VCM standard-setters, we are excited to unveil the world’s first insurance wrapper for voluntary carbon credits traded under Article 6. Meet Corresponding Adjustment Protect.

Designed to support the registries that hold the keys to CORSIA, Corresponding Adjustment Protect will on-ramp buyers and sellers faster and — we expect — encourage more compliance offsetting schemes in the future.

Other Q2 Highlights

David Antonioli joins Oka. Having spent over two decades at the forefront of climate action and carbon markets, most recently as Principal and CEO of Verra, David is bringing his unparalleled expertise and strategic insight to the Oka Advisory Board. Read our press release for more detail.

Oka goes global. Carbon markets are international, and so is Oka. Marking the start of our overseas expansion, we recently partnered with UK-based developer DelAgua — with whom we launched Corresponding Adjustment Protect — and Australia-based distributor Clima.

Last, but definitely not least: In May, the White House threw its weight behind the VCM with a landmark Joint Policy Statement and principles for market participation. The guidelines may be familiar, but the announcement was something new: an unprecedented sign of US government support (and a bullish signal) for the VCM. Watch this space.

It’s been a busy three months, and we’re looking forward to even more activity in the quarter ahead. Follow Oka on LinkedIn to keep up with our latest news and press. Alternatively, please reach out if you’d like to learn more about, or get involved with, Corresponding Adjustment Protect.