Tackling one of the significant risks linked to investments in carbon capture and storage (CCS) projects, global insurance company Marsh has introduced an innovative insurance solution designed to safeguard against the risks tied to these initiatives.
The insurance organization developed the new offering in collaboration with its Energy & Power team, with underwriting provided by the insurance and reinsurance expert Canopius.
As the world increasingly turns its focus toward mitigating climate change, CCS projects have emerged as vital components in achieving sustainability goals.
Recognizing the pressing need for risk management in this evolving sector, Marsh’s new insurance product aims to provide comprehensive coverage that addresses the unique challenges posed by CCS projects.
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The new insurance product by Marsh aims to deliver extensive coverage, allowing upstream energy companies to fulfill their financial security requirements for carbon capture projects that involve the transport and injection of CO2 into geological formations.
Traditionally, insurance for these situations would require physical harm or operational interruptions to occur, resulting from an uncontrolled well, in order to file a claim.
However, Marsh has taken an innovative approach by introducing a new non-damage trigger for geological CO2 leakage, which offers compensation for the expenses related to corrective actions in addition to a trigger for the consequent business interruptions.
The novel solution also provides coverage for expenses related to obtaining carbon credits to offset any CO2 emissions that may leak, depending on the project’s location.
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Marsh clarified that this coverage is applicable throughout the leak prevention process, whether the leak originates from planned onshore facilities, the CO2 pipeline or vessel, or the storage facility itself.
In a statement, Hannah Jennings, the global leader for CCS initiatives in Marsh’s energy and power department, emphasized the significant impact these projects can have in addressing climate change.
“Designed to support the upstream energy market as it adapts to the energy transition, Marsh Specialty’s new solution not only represents a meaningful shift in the parameters of traditional energy insurance but also delivers greater certainty and confidence to investors and users of CCS mechanisms,” Jennings said.
