Frequently Asked Questions

The VCM of today is fragmented and subject to serious governance issues. Given the demand for carbon credits and increased scrutiny on public corporations committing to decarbonization strategies, carbon credit sellers need ways to build trust with their corporate buyers  — and the world needs a VCM that clears the pathway to net zero. Carbon credit insurance delivers security, confidence, and protection in an evolving climate commitment landscape. Oka ensures carbon credit sellers can offer high-quality carbon credits as part of their portfolio and public corporations can protect their investments and their reputations when engaging with the VCM.

Corporations across the globe are adopting decarbonization strategies to reduce or eliminate carbon dioxide emissions. Yet, many corporations find they cannot entirely eliminate their emissions or reduce them at the necessary rate to achieve their climate commitments. Carbon credits have become an essential strategy for corporations committed to reducing GHG emissions and minimizing their environmental impacts. High-quality carbon credits fit well within a portfolio of other emission-reducing programs. 

Voluntary carbon credits direct private financing to climate-action projects that would not otherwise get off the ground, lowering the cost of new climate technologies and clearing the way to a net-zero future. According to Annette Nazareth, Chair of the Integrity Council, “We need every tool available working at full speed to channel investment towards keeping the global temperature within 1.5°C. A transparent, liquid, high-integrity voluntary carbon market is one very important tool we can use to achieve that goal.” Carbon credits are essential as part of a corporation’s decarbonization strategy.

A carbon credit must have a comparable environmental impact to direct GHG emission reductions. The world must be at least as well off when a carbon credit is used than it would have been if the corporation had reduced their carbon footprint. Therefore, carbon credits must be associated with GHG reductions or removals that:

• Have a robust determination of the GHG emissions impact (i.e. additional, not vulnerable, not overestimated)
• Avoid double counting
• Address non-permanence
• Facilitate a transition towards net-zero emissions
• Have strong governance arrangements and processes
• Are not associated with significant environmental and social harms

When these criteria are met, corporations have a high degree of confidence their carbon credit investments are high-quality.

There are many risks associated with carbon credits including catastrophic events, human-induced events, non-additionality, overcrediting, adverse impacts, exclusive claims, and fraudulent issuing, among others. Corporations can better honor their climate commitments by purchasing insured credits from carbon credit sellers, which effectively mitigate these risks and protect their reputations. No corporation should purchase an uninsured carbon credit, and no carbon credit sellers should offer uninsured credits.

Co-benefits are positive outcomes from a carbon offset project, over and above the greenhouse gas emissions reductions or removals, to communities in and around project sites. 

Co-benefits can be social, economic, or environmental. Examples include supporting biodiversity, gender equality, community employment opportunities, access to health and education, etc. These benefits are often listed under the categories set out by the UN Sustainable Development Goals.

Carbon credit buffer pools hold non-tradable “buffer” carbon credits to cover the non-permanence risk associated with carbon offset projects. A single account holds the buffer credits for all projects. In the case of a reversal, buffer credits are canceled to protect carbon known or believed to be lost. In theory, as long as the buffer pool remains solvent, the program’s permanence remains intact. 

California’s forest carbon offsets buffer pool is severely undercapitalized. A Frontiers research article finds that nearly one-fifth of the total buffer pool was depleted in under a decade, equivalent to over 95% of the program-wide contribution intended to manage all fire risks for 100 years. 

Buffer pool risk models are not dynamic and do not account for growing catastrophic risks. Moreover, buffer pools only cover unexpected natural disturbance risks — such as fire, droughts, and disease but do not cover any other risks associated with the credits, such as fraudulent issuing or cyber attacks. 

It’s impossible to mitigate the many compounding risks throughout a carbon credit’s lifecycle with buffer pools, which continue siphoning a portion of credits throughout a carbon project’s lifecycle. In comparison, Oka transfers carbon credit risks and converts them into a cost that can be managed upfront, increasing the value of sellers’ credits and securing corporations’ carbon investments.

February 2024, for the previous filing year.