OxCarbon

General NewsPress Release: OxCarbon and Kita announce pioneering approach to revolutionise buffer pool management

Press Release: OxCarbon and Kita announce pioneering approach to revolutionise buffer pool management

OXFORD, 14 March 2024 – UK-based carbon standard, OxCarbon, and specialist carbon insurance company, Kita, are delighted to announce an agreement for Kita to provide ‘Buffer as a Service’ for OxCarbon. 

Operating a buffer is the established way for a carbon standard to demonstrate and maintain integrity in today’s Voluntary Carbon Market. The buffer is a central pool of carbon credits to which each project developer is required to individually contribute, and these credits are not allowed to be sold. Buffers are intended to ensure the integrity of the carbon scheme, regarding permanence and performance. However, risk per carbon project is variable, which can cause challenges when assessing the level of contribution required per project developer. 

 

 

Kita’s buffer management product, Buffer as a Service, will reduce risk for OxCarbon by employing active risk management for the OxCarbon buffer, with project-specific risk assessment based on insurance-driven technical underwriting criteria. Buffer as a Service will help (i) strengthen buffer integrity and reduce conflicts of interest, through third party administration by a regulated entity; (ii) enable smarter buffer contributions for high-quality project developers; and (iii) facilitate compliance with evolving requirements within the VCM and wider regulatory bodies.  

This partnership follows on from OxCarbon and Kita’s 2023 MOU to collaborate in facilitating the scale-up of financial investment into climate impact projects through scientific and data-driven approaches. Buffer as a Service builds on key aspects of that agreement, such as working together to ensure the data provision and ongoing processes related to Measurement, Reporting and Verification (MRV) are transparent and comprehensive enough to enable development of viable risk management solutions for OxCarbon and its projects.  

OxCarbon will work with project developers to facilitate engagement with Kita to ensure that not only is scientific best practice being applied but that it is structured in a way that optimises commercial considerations, while staying true to OxCarbon’s standards of integrity. 

Kita’s Buffer as a Service management team has over 40 years cumulative experience in asset management, managing funds with billions under management, and will follow established norms in the wider financial markets to enable predictability of process to both OxCarbon and its stakeholders. 

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Kita is proud to partner with OxCarbon on Buffer as a Service. The risk management expertise of Kita, driven by technical insurance underwriting, combined with the transparent and scientific best practice approach developed by OxCarbon, will reduce risk and increase integrity in the management of the OxCarbon buffer; acting as a badge of confidence for scaling financial investment into the high-quality carbon projects we need to fight the climate crisis.”  

        Dr Paul Young, CTO and co-founder, Kita

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“Carbon markets can only benefit from subjecting projects to the professional scrutiny and risk-assessment process of companies such as Kita. Flat or generically assessed risk contributions to determine how many carbon credits a carbon project contributes to a Carbon Standard’s buffer penalises the best projects, reducing profitability at a critical stage. OxCarbon working with Kita can enable smarter buffer contributions while staying compliant with evolving requirements within the VCM and wider regulatory bodies.” 

       Stephen Lezak, OxCarbon Carbon Accounting Lead 

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For more information on carbon buffer pools and the integration of insurance with these mechanisms, please take a look at Kita’s in-depth report on the topic.