New carbon capture and storage insurance product from Aon
A new insurance product designed specifically for international transport and storage companies that are engaged in storing carbon dioxide has been developed by Aon in the UK.
The new product is aimed at providing cover for key risk exposures associated with carbon capture and storage (CCS), and advances the role of insurance in de-risking global CCS projects, said Aon. It stressed that while the product was initially created in conjunction with a UK project, it has been designed to work for projects globally.
The insurance product opens up access to capital providers and investors, addresses a significant protection gap for these developments, and changes the perception of what is insurable, said the broker. It added that carbon capture utilisation and storage addresses aspects of ESG by reducing carbon emissions and allowing energy and other emitting industries to meet their net-zero goals and objectives.
Aon’s CCS solution includes:
- Sufficient capacity for physical risks, loss of revenue and general liabilities for large-scale projects;
- Newly created and bespoke coverage that responds to issues with storage reservoir integrity, including loss of revenue;
- Indemnity for loss of tax credits or requirements to purchase carbon credits associated with a leak of COâ‚‚ from the carbon storage facility; and
- Placement with A- or higher-rated insurers, predominantly in the London market.
William Lynch, business leader for natural resources at Aon, said: “Carbon capture is a fundamental component in reducing emissions and supporting the energy transition. While challenges remain, this is a first-of-its-kind risk transfer solution, aimed at providing comprehensive cover under an agreed policy wording, for transport and storage companies engaged in CCS. Cover spans the construction and repurposing of existing assets as well as the operational phase. A huge benefit for operators and their investors, as well as their customers, is knowing what their insurance costs and coverage will be in an otherwise uncertain market.”
The new product was created through Aon’s role as insurance broker to Eni UK, the lead company in the consortium delivering the innovative low carbon and hydrogen HyNet North West project (in which Eni is the transportation and storage operator), and the Northern Endurance Partnership (NEP), comprising bp, Equinor, and TotalEnergies.
This project is among the first large commercial-scale and complete carbon transportation and sequestration processes for capturing, removing and storing industrial carbon dioxide emissions.
