Carbon Capture, Utilisation, and Storage (CCUS) technologies are crucial, as CO2 reductions alone won't get us to #netzero2050. The Intergovernmental Panel on Climate Change clearly spelt out the need for CCUS. Especially the so-called “hard-to-abate” industries, such as cement and steel, will need to continue using traditional energy sources for a while. But their CO2 emissions can be captured, safely transported, and finally stored (or reused).
There is a considerable amount of movement regarding CCUS projects, with 30 facilities around the globe already operational – and many more in various development phases. However, the task ahead is daunting. These 30 facilities capture 42.5 million tonnes per year. In order to reach the world's net zero goals, facilities worldwide must be scaled to capture and store 7.6 gigatons. While this represents a dramatic increase, it is feasible thanks to generous global storage capacity.
As carbon capture from the air is, at this point, still in the early stages of scaling, most current projects focus on the capture of CO2 directly from sources such as industrial complexes. Existing technologies are reasonably matured, as is transportation (similar to transporting natural gas) with a solid rationale. However, there are several challenges still to be overcome in storing carbon deep underground, possibly using depleted fossil fuel reservoirs with well-known geological characteristics.
With the necessary focus on risk assessment and safety aspects of good operations, carbon storage drilling will essentially mirror oil drilling. The utilisation of captured CO2 will remain a minor part of this emerging industry – an expected 95% will go into underground storage.
Across Europe alone, there are currently 72 CCUS projects, some of them operational and many in various stages of development. One noteworthy project operational since 1996, Sleipner, a natural gas field in the North Sea, is known as the world's first offshore CCS implementation. The reason for Sleipner's early capture of CO2 and storing it far below the seabed was simple: taxes. CO2 taxation led the natural gas producer to find and implement a CCS solution long before much of the world had even heard of such technologies.
The insurance industry has a long history and experience with hydrocarbon and geothermal wells, and, as such, insurance considerations are, to some extent, similar when it comes to underground CO2 storage. Of course, new technologies need to be factored in, but overall, the approach to insurance remains the same. As complex as some risks are, an insurer's 'energy package' is comprehensive coverage.
However, one distinct difference between the risk coverage of the oil and gas industry and the emerging carbon storage industry is time. With oil and gas – from exploration to well depletion – there is a time frame of at most 50 years. Once a well is depleted, it is plugged and abandoned. However, safe carbon storage might require risk protection for hundreds of years.
The coming years will see changing tax schemes and more regulation. These will create additional pressure on the fossil fuel industries and simultaneously accelerate the development of CCUS technologies and facilities. The global re-insurance industry will play an important role in the Energy transition regarding CCUS.
