Howden, the London-based global insurance group, announced an insurance facility that covers the leakage of carbon dioxide (CO2) from commercial-scale carbon capture and storage (CCS) facilities.
The insurance facility, designed by Howden and led by SCOR’s syndicate at Lloyd’s, provides cover for environmental damage and loss of revenue arising from the sudden or gradual leakage of CO2 from CCS projects into the air, land and water. The facility is available globally.
Howden called the solution a first-of-a-kind facility that will unlock vital investment to support the global transition to net zero.
The solution addresses a key risk associated with CCS technology and supports the development of a commercial insurance market for leakage risk, the need for which has been highlighted by the UK Government Department for Energy Security & Net Zero’s Business Model for Carbon Capture, Usage and Storage.
Other following markets within Lloyd’s have committed to support the facility, with further capacity anticipated to meet commercial demand globally. Led by Glenn O’Halloran, executive director, Howden Climate Risk & Resilience, this product further emphasizes Howden’s leading position in the design and deployment of unique insurance structures that support decarbonization.
The financial viability of CCS projects often relies on revenue from the voluntary and compliance carbon markets. This new form of insurance covers liabilities arising from carbon credits and allowances, including UK and EU ETS liabilities.
This is the second solution from Howden designed to support the growth of the global carbon market. In 2022, Howden launched the world’s first carbon credit invalidation insurance solution.
The global carbon capture and sequestration market is projected to reach a value of USD 7.49 billion by 2030 at a compound annual growth rate of 19.9% between 2023 and 2030, said Howden, quoting Vantage Markets Research. The growth of this market, Howden added, is accelerating the need for effective insurance solutions to protect the financial viability and stability of CCS projects.
Howden said its facility will de-risk projects critical to the decarbonization of the global economy by offering balance sheet protection through structured risk transfer solutions.
“This breakthrough shows how insurance helps unlock vital finance to drive the net zero transition at the scope and speed required. By improving the bankability of critical CCS projects, we are establishing insurance as a force for good and building on the work being done by the Sustainable Markets Initiative (SMI) to realise the potential of engineered carbon removal solutions and move this nascent sector into the mainstream,” commented Rowan Douglas, CEO, Howden Climate Risk and Resilience.
John Neal, CEO, Lloyd’s and chair of the Sustainable Markets Initiative Insurance Task Force, said: “This new insurance facility is an example of what can be achieved when innovative minds join forces to support climate positive solutions in our market. Developed at Lloyd’s, in partnership with The Insurance Task Force of the Sustainable Market’s Initiative, we hope together we can spark more cross-sector collaboration that will enhance our resilience against the climate crisis.”
“We are delighted to lead this facility, which is evidence of the innovative risk transfer solutions that can be brought to market when the best minds across the industry work together to de-risk the global energy transition,” according to Romain Launay, CEO, SCOR Specialty Insurance and Marie Biggas, CUO, SCOR Syndicate in a joint statement.
“Furthermore, it fully supports SCOR’s target to multiply insurance and facultative reinsurance coverage for low carbon energy by 3.5 by 2030. We look forward to working with Howden and the market to boost investor and lender confidence in CCS projects,” they added.
About Howden and Howden Climate Risk and Resilience
Founded in 1994, Howden operates in 50 countries across Europe, Africa, Asia, the Middle East, Latin America, the US, Australia and New Zealand, employing 16,000 people and handling $35 billion of premium on behalf of clients.
Howden’s Climate Risk and Resilience team provides climate advisory and risk transfer products that help to accelerate and de-risk the move towards a low carbon economy, and to mitigate the impact of climate change.
Source: Howden
Topics New Markets
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