Aon launches carbon capture and storage insurance product

Broker Aon has launched a new insurance product for international transport and storage companies engaged in storing carbon dioxide.

The new proposition is aimed at providing cover for risk exposures associated with carbon capture and storage (CCS) and provides capacity for physical risks, loss of revenue and general liabilities for large-scale projects.

It also features indemnity for loss of tax credits or requirements to purchase carbon credits associated with a leak of carbon dioxide from the carbon storage facility.

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.”

Development

Aon’s energy transition product was created through its role as insurance broker to Eni UK, a company delivering the low carbon and hydrogen HyNet North West project.

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.

The product has been developed acknowledging energy regulators and stakeholder expectations and in support of the assessment of available insurance coverage.

“Aon has spearheaded the development of this product over the last 18 months, working in collaboration with leading underwriters and the legal community, and we look forward to working on many similar projects,” Lynch said.