Earth and Habitat (Commonwealth Union) _Aon has unveiled a groundbreaking insurance product tailored specifically for international transport and storage companies engaged in carbon dioxide storage, marking a significant step in de-risking global Carbon Capture and Storage (CCS) projects.
The innovative product aims to provide comprehensive coverage for key risk exposures associated with CCS, thereby advancing the role of insurance in supporting these initiatives. By addressing a protection gap for such developments, Aon seeks to transform the perception of what is insurable in the realm of carbon capture.
“Carbon capture is a pivotal element in emissions reduction and facilitating the energy transition,” stated William Lynch, Aon’s business leader for natural resources. “This pioneering risk transfer solution offers comprehensive cover under an agreed policy wording, catering to transport and storage companies involved in CCS.”
Carbon Capture Utilisation and Storage aligns with environmental, social, and governance (ESG) principles by curbing carbon emissions and enabling energy and other emitting industries to achieve their net-zero objectives.
Aon’s energy transition product emerged through its collaboration with Eni UK, the lead entity in the HyNet North West project focused on low carbon and hydrogen initiatives, and the Northern Endurance Partnership (NEP), comprising BP, Equinor, and Total Energies. These ventures represent pioneering efforts in carbon transportation and sequestration, crucial for decarbonising the UK’s industrial core.
The newly developed insurance solution, initially tailored for a UK project, is adaptable for global applications, aligning with energy regulators’ and stakeholders’ expectations. Noteworthy features include:
- Adequate capacity for physical risks, revenue loss, and general liabilities for large-scale projects.
- Tailored coverage addressing storage reservoir integrity concerns, including revenue loss.
- Indemnification for loss of tax credits or carbon credit purchase obligations linked to COâ‚‚ leaks from storage facilities.
- Placement with reputable insurers rated A- or higher, predominantly in the London market.
This comprehensive coverage spans construction, asset repurposing, and operational phases, offering operators, investors, and customers clarity and certainty in an otherwise uncertain market.
“Aon has been at the forefront of developing this product, collaborating with leading underwriters and legal experts over the past 18 months,” Lynch emphasized. “We anticipate further collaborations on similar projects, cementing our commitment to driving innovation in insurance solutions for the energy transition.”Top of Form
