Insurance for Carbon Capture and Storage (CCS) Projects

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.

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.