US project offers first insured biochar carbon removal credits

14 Mar 2024

Quantum Commodity Intelligence – US developer Oregon Biochar Solutions has started offering the first biochar carbon removal (BCR) credits underwritten by an insurance policy in a bid to provide further confidence to buyers, chief operating officer Karl Strahl told Quantum.

In the past year, a number of specialist companies have been set up offering different types of coverage to the voluntary carbon market, while insurance industry giants are also entering the space.

Oregon Biochar Solutions (OBS) is one of the largest biochar producers in the US and was among the first certified under the Finland-based Puro.earth standard, currently the main registry for BCR.

It has started selling BCR credits insured by US-based Oka The Carbon Insurance Company (Oka), which was granted approval by Lloyd’s to start underwriting risks from January 1 this year.

The policy applies to a range of risks including reversals, over-crediting, non-additionality, double issuance, project fraud and geopolitical risks, among others, and represents a small fee for buyers.

The deal was facilitated by Canada-based consultancy GECA Environnement, which helps manage the OBS project.

Strahl said insurance applies to a portion of Oregon's BCR credits for now as the company is still testing interest, but in the long-term, it intends to apply it to all the firm's output.

"The biochar carbon credit market, especially in the US, is very young and it's grown very rapidly. In order for it to keep growing, it has to have some really good foundation from the ground up," Strahl said.

"This is part of that foundation, so that buyers know that when they buy a credit, it's gone through multiple layers of due diligence and it has really passed all the tests," he added.

Oka has started announcing "pre-wrapped" reversal and invalidation insurance deals in recent weeks, including one with carbon marketplace Cloverly in January, but this is its first BCR agreement.

Chief executive Chris Slater told Quantum a further three BCR projects are in the pipeline, while in total the US firm has sent quotes to around 60 developers since the start of the year, underscoring the level of interest for insurance products.

"OBS want to convey a compelling quality message into the market...If something happens to the project, the buyer has recourse, that is a significant reassuring nudge," Slater said.

The executive said the cost of the operation is small for buyers and comparable to "any other insurance product that they will buy".

Carbon dioxide removal projects are generally thought to be easier to verify than avoidance carbon credits, but Slater said many buyers also consider how recent these methodologies are before making a purchase decision.

Puro.earth has operated a biochar methodology for five years and only became certified under the International Carbon Reduction and Offset Alliance, a standard set up by carbon traders, last year, boosting the demand for its carbon credits.

"Biochar methodologies are newer in the eyes of the buyer who often feel invalidation risk is higher than for other sectors such as REDD+. We would perceive it as lower, so that's great for the insurance model," said Slater.