Insurers Are Working to Shore Up $2 Billion Carbon Offset Market

Data fraud, questionable accounting practices and intensified catastrophes are just some of the issues that have battered the voluntary carbon market.

Those misfortunes have helped spur a new line of business: Insurance policies designed to de-risk credits that polluters buy to neutralize their climate impact. Whether insurance can help stabilize an industry under heavy scrutiny remains to be seen, though.

Carbon credits are a financial instrument to help channel capital into projects that cut greenhouse gas emissions. Project developers sell credits equal to one ton of carbon dioxide reduced or avoided to polluters who want to cancel out emissions. But ...