Insurance for Carbon Capture and Storage (CCS) Projects

Insurance is the key to unlocking finance

Three industrial chimney flumes

New whitepaper: How Insurance can address the financing challenges of Carbon Capture and Storage

De-risk your CCS project

Carbon Capture and Storage (CCS) projects have a complex risk profile over the long term, and as a result, achieving financing can be difficult.

De-risking financing to unlock investment into low carbon infrastructure is a key goal of Howden’s Climate Risk and Resilience Team.

Part of that involves designing risk management programmes that improves confidence for lenders and investors, thus increasing the range of funding opportunities for these types of projects.

By building a programme of interconnecting insurance products, it is possible to remove the bulk of the financial risk of CCS projects.

We identify risks throughout the value chain and build solutions that fit

In doing so, we are able to present tailored solutions that protect key risks and revenue streams.

  • Construction and operational  risks
  • Technology risks  
  • Environmental liability and leakage risks
  • Counterparty credit worthiness
  • Tax and Contingent risks
  • Carbon credit related risks  

Where insurance can help CCS developers

Carbon Capture and Storage Leakage Risk insurance

Howden presents a first-of-its-kind insurance facility covering 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. The Carbon Capture and Storage Leakage Policy incorporates first party financial losses including the devaluation of carbon offsets, and clawback of tax credits.

Tax and Contingent risks insurance for CCS

Tax insurance is a valuable tool for enhancing the long-term bankability of CCS and other low-carbon projects, given the uncertainty surrounding future tax credit interpretations. By providing clarity and stability on tax-related risks, it helps secure financing and improves investor confidence.

Offtaker credit worthiness

Carbon Capture and Storage developers may face counterparty credit risk due to the long-term nature of offtaker agreements. Howden addresses this challenge by offering credit insurance policies that protect against contractual defaults.

Technology performance risk

Technology performance insurance in CCS projects serves two crucial functions: it backs warranties provided by OEMs and EPCs, assuming their obligations, and guarantees the efficacy of the capture technology. If the technology underperforms, risking the debt service, this insurance can assume debt obligations.

Carbon transportation pipeline
glenn_ohalloran
Integrating insurance considerations into your CCS project from the outset can significantly enhance its risk profile. A well-structured insurance strategy may be the key to securing financing.
glenn_ohalloran
Glenn O' Halloran, Executive Director, Howden Climate Risk and Resilience

Leverage insurance early

Request our whitepaper on insurance strategy and unlocking finance for CCS projects

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