Howden launches new insurance facility for net-zero transition initiatives

It aims to address CO2 leakage impacts

Howden launches new insurance facility for net-zero transition initiatives


By Kenneth Araullo

Howden has introduced a pioneering insurance facility specifically designed to cover carbon dioxide (CO2) leakage from large-scale carbon capture and storage (CCS) facilities, with the product aiming to stimulate the crucial investments necessary for achieving global net-zero targets.

Developed by Howden and spearheaded by SCOR’s syndicate at Lloyd’s, the facility offers protection against environmental damage and revenue loss resulting from CO2 leakages in CCS projects, whether these occur suddenly or gradually.

This insurance solution addresses a major risk inherent in CCS technology and supports the emergence of a commercial insurance market for such risks. The UK Government Department for Energy Security & Net Zero has underscored the importance of this coverage in its Business Model for Carbon Capture, Usage, and Storage.

Various other markets within Lloyd’s have pledged their support for this facility, and additional capacity is expected to meet growing global commercial demand. Led by Glenn O’Halloran, executive director at Howden Climate Risk & Resilience, this initiative, the company states, reinforces Howden’s role in creating insurance structures that aid decarbonisation efforts.

The financial stability of CCS projects is often dependent on revenues generated from voluntary and compliance carbon markets. Howden’s insurance covers liabilities linked to carbon credits and allowances, including those under UK and EU ETS frameworks. This offering follows Howden’s 2022 launch of the world’s first carbon credit invalidation insurance solution.

The carbon capture and sequestration market is forecast to reach US$7.49 billion by 2030, growing at a compound annual rate of 19.9% from 2023 to 2030. This growth trajectory underscores the necessity for effective insurance solutions to safeguard the financial health and stability of CCS projects.

“This breakthrough shows how insurance helps unlock vital finance to drive the net zero transition at the scope and speed required,” Howden Climate Risk and Resilience CEO Rowan Douglas, CBE said. “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.”

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