Insurance is seen as a key enabler for carbon capture and storage (CCS) projects, with nearly two-thirds of leaders relying heavily on insurance to manage risk, according to a recent analysis by Marsh Risk, a Marsh Risk business.
The analysis is based on insights from a survey of 504 senior UK CCS decision-makers covering the global CCS value chain.
The survey shows that organizations recognize that effective risk transfer is critical to meeting financial security obligations, securing project financing and ensuring long-term viability.
Transport and warehousing operators are particularly likely to rely heavily on insurance, with 40% saying it is critical, compared with just 26% of industrial emitters.
Survey results also show that 39% of decision makers believe long-term insurance policies are critical to managing post-closure liabilities, with transport and warehousing operators particularly likely to view this as critical (57%).
Andrew Herring, global chairman of energy and power at Marsh Risk, said: “These figures highlight the important role that insurance plays as a fundamental enabler of investment, supporting the growth of the CCS industry.
Encouragingly, 84% of respondents believe the insurance market has sufficient appetite and capacity to meet CCS risk transfer requirements.
However, engagement between risk, insurance and technical teams remains limited, highlighting the need for better coordination between risk management and project delivery.
Only 38% of respondents reported a high level of engagement between risk and insurance functions and CCS project teams, while this dropped to 30% among engineering directors and 29% among industrial emitters.
The analysis also warns that if the government fails to provide stable and reliable support, the UK and Europe may miss out on important CCS investment opportunities, as emerging markets in the Middle East and Asia quickly attract capital investment.
Challenges such as rising costs, regulatory readiness gaps and policy uncertainty could slow deployment, putting jobs and regional economic growth at risk.
The survey results show that Europe remains the leading region for planned CCS investments, with 62% of industry leaders targeting the region, ahead of North America and the Middle East and North Africa.
However, with the average projected cost of capturing, transporting and storing carbon dioxide estimated at $163 per ton, well above current carbon prices, many projects may still rely on state subsidies to achieve commercial viability. Additionally, 42% of leaders expect costs to rise by 11-15%, while 31% expect costs to rise by 16-20%, further adding to the pressure on project economics.
The cautious approach to investment in CCS is reflected in the staggered timetable for final investment decisions (FIDs): 26% is expected to be invested in the period 2025-27, 35% in the period 2028-30, 23% in the period 2031-33 and 12% in the period 2034-36. While this reduces the immediate financial risk to developers, there is the potential for bottlenecks to form a decade later, straining financing, supply chains and storage capacity.
Herring added: “If the global CCS industry is to attract the scale of investment needed to accelerate decarbonization and support economic growth, stable policy frameworks, regulatory certainty and credible risk transfer mechanisms are critical. To realize this vision, governments must commit to multi-year funding plans, establish clear project pipelines and invest in critical CO2 transport and storage infrastructure. The insurance industry is playing its part in promoting the development of this important energy transition industry, and governments must step up now.”
The findings indicate that CCS investments are moving from primarily US- and Europe-centric markets to multi-regional frontiers.
Emerging regions are positioning themselves for the next wave of growth: Australia leads the Pacific with projects linked to LNG and hydrogen exports that leverage existing energy infrastructure, while in China, CCS pilots are expected to expand under 2060 net-zero emissions commitments.
