Carbon capture, utilisation and storage (CCUS) has emerged as a critical tool for decarbonisation, Moreover, as such projects typically operate tight margins are heavily reliant on project finance structures, making lender confidence and investment protection critical, insurance has a pivotal role to play in enhancing CCUS.
As Willis Head of Energy and Mining in Asia Charlotte Watts put it at the event titled ‘Asia’s CCUS challenge from: ‘Can we capture the carbon’ to: ‘Who carries the risks, who pays for it, and how do we make projects bankable?’’, hosted by Willis, “There are novel risks that we are aware of, related to the generation and trading of carbon credits, of which many today remain uninsured.”
This mean, Ms Watts continued, “There is exposure for stakeholders, and the insurance industry is starting to innovate, with product starting to become available to support the unique challenges.”
Additionally, she remarked that “the combination of the rapid growth, rising regulatory certainty and increase in industrial adoption is creating a structurally expanding demand base for risk transfer”.
So why are carbon capture and storage (CCS) projects not growing as quickly as anticipated?
According to Ms Watts, as CCS relies heavily on the government incentives and support, a clear regulatory landscape and policy commitments may be the key to developer confidence.
“This is where insurance needs to come in and support a vital part of that journey,” she said.
But a challenge to this is the disintegrative value chain, that Ms Watts called “deliberately disintegrated”, where different parties are responsible for various stages of capture, transport and storage.
Interdependent risks that must be addressed
Ms Watts also spoke of three “key interdependency risks” that need to be solved before CCS projects continue pushing ahead.
She started with construction interdependency risk where “a delay on one component part causes financial loss down the value chain”. But next, she said, comes “CO2 handover interface risk”.
“There clearly needs to be clear contractual arrangements between each party as to who has responsibility at which stage,” she said.
The final one is the counterparty dependency, where “a loss downstream in the value chain during transportation may not only result in the emitter losing the carbon credits that they were anticipating, but also prolonged downtime for the transport”.
“Ultimately, there may be no revenue potentially for the storage company either,” said Ms Watts.
“This may jeopardise the whole revenue stream across the whole value chain.”
She said, “This is the area where we see most concern coming from lenders and banks, and where insurance is vital to unlock the project finance.”
Willis hosted ‘Asia’s CCUS challenge from: ‘Can we capture the carbon’ to: ‘Who carries the risks, who pays for it, and how do we make projects bankable?’’ on 7 October 2026.