Operators may remain responsible for monitoring underground sites decades after operations end.
Insurers may need new coverage arrangements to address long-term liabilities and operational risks as carbon capture and storage projects become more complex.
According to a joint report by the Geneva Association, the Oil and Gas Climate Initiative (OGCI), and the Clean Energy Ministerial CCUS Initiative, existing insurance products do not always cover risks arising from shared infrastructure, multiple project operators, and responsibilities that continue after carbon dioxide storage operations end.
Carbon capture and storage (CCS) involves collecting carbon dioxide from industrial facilities, transporting it, and storing it underground to prevent its release into the atmosphere.
Insurance is already available for construction, operations, environmental damage, transport, business interruption, and certain liability risks. However, coverage limits, policy periods, and terms depend on the risks associated with each project.
One major challenge is the length of insurers’ coverage compared with the responsibilities of project operators.
Even after carbon dioxide injection stops, operators may be required to monitor storage sites, maintain facilities, and meet financial obligations for years or decades.
These responsibilities can extend beyond standard insurance policy periods, making some long-term liabilities difficult or too costly for private insurers to cover.
The report also identified gaps in coverage for losses caused by delays or disruptions elsewhere in a shared CCS network. Such losses may fall outside conventional insurance policies unless they can be linked to a clearly defined insured event.
To address these gaps, the report recommended involving insurers and reinsurers earlier in project planning, before contracts, infrastructure designs, and financial arrangements are finalised.
It also called for clearer rules on liability, monitoring requirements, and the transfer of responsibilities after storage sites close.
Sharing technical and operational data could help insurers assess potential losses, set premiums, and determine coverage limits. Limited or inconsistent data currently makes it harder to develop insurance products for some CCS risks.
The report said government-backed arrangements and public-private partnerships may be needed where private insurers cannot cover certain risks independently.
As more operational data becomes available, insurers could eventually take on a greater share of these risks.
The report’s recommendations are non-binding and do not require insurers or reinsurers to provide coverage for any particular project.