Global insurance group Howden announced the first-of-its-kind insurance facility for carbon capture and storage (CCS) projects.
The novel insurance facility designed by Howden is led by French reinsurer SCOR’s syndicate at Lloyd’s and will enjoy the support of other markets within the specialist Lloyd’s insurance and reinsurance marketplace.
With its new solution, Howden aims to provide cover in the event of leakage of CO2 from large-scale carbon capture plants into the air, water and land.
The CCS insurance facility will offer the potential to tap into critical investment needed to allow the global carbon markets to scale, thus advancing the world’s transition to a net zero economy.
The launch marks Howden’s second initiative designed to help facilitate the growth and expansion of the carbon market after the broker’s carbon credit invalidation insurance solution, which was unveiled in 2022 and intended to boost confidence in the voluntary carbon market (VCM).
The company’s new solution, on the other hand, addresses a major issue associated with CCS technology – the risk of leakage – and in doing so, supports the creation of a commercial insurance market for leakage risk.
Howden believes its novel insurance facility will help de-risk CCS projects that are crucial to the decarbonization of the economy on a global scale.
“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,” Rowan Douglas CBE, CEO of Howden Climate Risk and Resilience said.