LONDON 14 May 2024 – Aon plc (NYSE: AON), a leading global professional services firm, today announced that it has developed a new insurance product designed specifically for international transport and storage companies that are engaged in storing carbon dioxide.
The new product is aimed at providing cover for key risk exposures associated with Carbon Capture and Storage (CCS) and advances the role of insurance in de-risking global CCS projects. This, in turn, opens up access to capital providers and investors, addresses a significant protection gap for these developments, and changes the perception of what is insurable. Carbon Capture Utilisation and Storage addresses aspects of environmental, social, and governance (ESG) by reducing carbon emissions and allowing energy and other emitting industries to meet their net zero goals and objectives.
Aon’s energy transition product was created through its role as insurance broker to Eni UK, the lead company in the consortium delivering the innovative low carbon and hydrogen HyNet North West project (in which Eni is the transportation and storage operator), and the Northern Endurance Partnership (NEP), comprising of bp, Equinor, and TotalEnergies. This project is among the first large commercial-scale and complete carbon transportation and sequestration processes for capturing, removing and storing industrial carbon dioxide emissions – which is key to the decarbonisation of the UK’s industrial heartland. The product has been developed acknowledging energy regulators and stakeholder expectations and in support of the assessment of available insurance coverage. While it was initially created in conjunction with a UK project, it has been designed to work for projects globally.
Aon’s multi-component CCS solution has the following key features:
- Sufficient capacity for physical risks, loss of revenue and general liabilities for large-scale projects;
- Newly created and bespoke coverage that responds to issues with storage reservoir integrity, including loss of revenue;
- Indemnity for loss of tax credits or requirements to purchase carbon credits associated with a leak of CO₂ from the carbon storage facility; and
- Placement with A- or higher-rated insurers, predominantly in the London market.
William Lynch, business leader for natural resources at Aon, said:
“Carbon capture is a fundamental component in reducing emissions and supporting the energy transition. While challenges remain, this is a first-of-its-kind risk transfer solution, aimed at providing comprehensive cover under an agreed policy wording, for transport and storage companies engaged in CCS. Cover spans the construction and repurposing of existing assets as well as the operational phase. A huge benefit for operators and their investors, as well as their customers, is knowing what their insurance costs and coverage will be in an otherwise uncertain market.
“Aon has spearheaded the development of this product over the last 18 months, working in collaboration with leading underwriters, and the legal community and we look forward to working on many similar projects.”
About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries and sovereignties with the clarity and confidence to make better risk and people decisions that help protect and grow their businesses.
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Media Contacts:
FTI Consulting
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Colin Mayes
Aon
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+44 (0)7801 748138