Zurich has announced that its emerging markets unit is providing political risk insurance for carbon credit projects.
Under the Kyoto protocol, an international treaty created to reduce greenhouse gas (GHG) emissions linked to global warming – certain types of projects are eligible for carbon credits based on the level of greenhouse gases reduced.
The carbon credit market, currently estimated to be $60 billion – has doubled during the last two years. The protocol provides the means to monetize the environmental benefits of reducing GHGs and sell the emissions credits.
Zurich’s policy helps to protect against risk of host government actions that might prevent an investor from receiving benefits associated with emission credits generated.
Daniel Riordan, executive vice president and managing director for Zurich’s emerging markets unit, said: Our involvement with carbon credit projects highlights the role of political risk coverage in helping make these projects more attractive to investors who are concerned about political risk and market volatility. As financial incentives for carbon projects become more common in the advent of emissions trading, we anticipate seeing more investments in emerging markets.