CFC gets green light to cover projects under global airline emissions scheme

Specialist insurance provider CFC has been given the green light to offer insurance policies that support the eligibility of carbon credits under the Carbon Offsetting and Reduction Scheme for International Aviation (Corsia). 

Corsia is a global initiative by the International Civil Aviation Organisation (ICAO), designed to limit carbon emissions from international flights.

The insurance covers the risk that corresponding adjustments – an accounting mechanism under Article 6 of the Paris Agreement – are not applied.

It ensures that when carbon credits are transferred internationally, the emission reductions are only counted against one target.

With the Corsia initiative in its first phase, airlines from participating states are required to offset a portion of their carbon emissions occurring between 2024 and 2026. From 2027, Corsia will become mandatory for most ICAO member states. 

CFC’s Corsia Guarantee Insurance has been approved by Gold Standard as an insurance proposition under the first phase of the Corsia scheme.

George Beattie, head of innovation at CFC, said: “Project developers have faced huge challenges in obtaining their compulsory Corsia insurance coverage. There have been no commercially viable options available to-date, despite the great efforts of the World Bank.

“CFC is extending its leadership in carbon insurance by delivering yet another insurance industry first – this time providing critical compulsory insurance to projects looking to provide supply to the Corsia scheme.” 

Recent projects

Over the last 18 months, CFC claims to have launched several industry-first products and “facilitated some of the largest carbon deals in history”, including unlocking a £150m ($200m) debt facility provided by JP Morgan to US based project developer Chestnut Carbon. 

On this progress, Beattie adds: “This is yet further evidence of the role that the insurance industry can play in facilitating not just the financing of high-quality carbon credit projects themselves, but also in delivering solutions to enable the practical implementation of industry-wide carbon reduction schemes.

”I truly believe this initiative will act as a litmus test and we will see similar schemes rolled out across other industry sectors in the years ahead as the climate crisis continues to worsen. Despite widespread short term political denial, it is the defining challenge of our time.”