London-based Kita scores £4m investment to bring carbon insurance offerings to the public
Kita has announced a £4m seed funding round headed by Octopus Ventures, together with current investors Insurtech Gateway, Carbon13 and Climate VC, and new investors Chaucer Group and Hartree Partners.
Kita is a company dedicated to providing insurance for carbon credit transactions; this is done to lower the risk associated with such purchases. The main objective is to facilitate more upfront financing so carbon removal solutions can access larger amounts of reliable funding and increase their influence at a more accelerated pace.
Coming to grips with climate change necessitates that we (1) halt the production of carbon dioxide and (2) take away the carbon dioxide that already exists in the atmosphere. According to the Intergovernmental Panel on Climate Change (IPCC), attaining climate objectives necessitates the removal of billion tonnes of carbon dioxide, an action that is now "inevitable".
In order to rapidly expand Carbon Dioxide Removal (CDR) solutions, trillions of pounds are needed for investments that cover both nature-based approaches such as afforestation and engineered ones like direct air capture. The majority of these investments go through the Voluntary Carbon Market (VCM) and more and more firms are now taking an interest in procuring high-grade carbon removal credits to accomplish their net zero objectives. Unfortunately, due to the lack of clarity and quality metrics in the VCM, there is a high-risk atmosphere for CDR investments that is preventing financing on a larger scale.
Kita's mission is to create a wide variety of insurance solutions to reduce danger and increase visibility in the newly established carbon markets space. This would include safety for vendors, purchasers, and middlemen.
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Natasha Jones from Octopus said, "Carbon removal is essential to combat climate change and needs to be done on a more expansive and faster level. Having insurance can help to decrease the risks of investing in carbon removal solutions, provide incentives to have more high-quality carbon credits, and contribute to the Voluntary Carbon Market's transparency. We are delighted to be collaborating with Kita to create the first carbon insurance solutions, which will unlock billions of dollars to combat the climate crisis."
Kita's debut venture, Carbon Purchase Protection Cover, safeguards buyers of forward purchased carbon removal credits against delivery risk, addressing a significant deficiency in protection. By boosting investor confidence in carbon delivery, it stimulates more capital to support carbon removal ventures, helping the world battle the climate emergency at the necessary rate.
Natalia Dorfman, Chief Executive Officer and Co-Founder of Kita, states that in order to avoid the most extreme effects of climate change, an enormous amount of CO2 must be taken out of the atmosphere each year for the rest of the century. Achieving this is a huge undertaking, and it necessitates taking the risk out of and providing access to capital for carbon removal schemes. Insurance can be a key enabler by removing risk, building trust in the market, and helping to bring capital to quality carbon removal projects to help them expand. Kita is enthusiastic about creating these insurance products, and is proud to introduce their initial product, Carbon Purchase Protection Cover, to the market.
In December 2021, Carbon13 climate tech venture builder in Cambridge founded Kita, headed by Dr. Paul Young, Thomas Merriman, and Natalia Dorfman. The announcement of the funding coincides with Kita's accomplishments in their first year. With the help of Insurtech Gateway, Kita obtained FCA approval and Lloyd's of London coverholder status. Chaucer Group is providing lead underwriting capacity, and Munich Re Syndicate and RenaissanceRe are providing follow capacity. Also, PDIE Group nominated Kita for the Earthshot Prize 2023 and awarded them grants from the European Space Agency and UK Research and Innovation.
Kita is allocating the funds from this investment to expand its personnel, develop its risk modelling based on technology, and introduce Carbon Purchase Protection Cover as its first insurance product. Additionally, Kita plans to create a variety of carbon insurance products to protect against all types of risks present in the carbon markets.