Howden Launches Carbon Capture and Storage Leaks Insurance Product

Howden recently introduced an insurance product designed to mitigate risks associated with carbon dioxide (CO2) leakage from commercial-scale carbon capture and storage (CCS) facilities. The product aims to stimulate investment that Howden says will support the shift toward achieving net-zero emissions.

Led by SCOR's syndicate at Lloyd's, Howden will offer coverage for environmental damage and revenue loss resulting from the sudden or gradual leakage of CO2 from CCS projects. Several markets within Lloyd's have also committed to supporting the effort.

The initiative addresses a key risk associated with CCS technology while also supporting the development of a commercial insurance market for leakage risk, the need for which has been highlighted by the UK Government Department for Energy Security & Net Zero's Business Model for Carbon Capture, Usage, and Storage, Howden said.

Furthermore, the financial viability of CCS projects often relies on revenue from the voluntary and compliance carbon markets. This new form of insurance covers liabilities arising from carbon credits and allowances, including UK and EU Emissions Trading System (ETS) liabilities, Howden said.

Prior to this undertaking, Howden launched a carbon credit invalidation insurance solution in 2022.

The global carbon capture and sequestration market is expected to reach $7.49 billion by 2030, with a compound annual growth rate of 19.9 percent between 2023 and 2030, accelerating the need for effective insurance solutions to protect the financial viability and stability of CCS projects, Howden said.