International Union of Marine Insurance (IUMI) supports the idea that carbon capture, utilisation, and storage (CCUS) technologies are crucial, as CO2 reductions alone won’t get us to net zero by 2050.
According an article by Michele Cibrario, Member, IUMI Offshore Energy Committee & Co-Head Renewable Energy, Vice President, Global Speciality, Swiss Reinsurance Company, 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.
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).
… said Michele Cibrario, Member, IUMI Offshore Energy Committee & Co-Head Renewable Energy, Vice President, Global Speciality, Swiss Reinsurance Company
DNV had also supported the idea that over the next decade, carbon capture will start to play a larger role in the fight against climate change. And with more industry stakeholders looking at different transportation options between capture sites and storage locations, liquid CO2 carriers will become an important link in the value chain.
In addition, The Climate Change Authority of Australia had also highlighted the importance of and carbon capture and storage in reducing emissions.
Cibrario claims that 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.
Existing technologies are reasonably matured, as is transportation (similar to transporting natural gas) with a solid rationale, says Cibrario. However, he adds that there are several challenges still to be overcome in storing carbon deep underground, possibly using depleted fossil fuel reservoirs with well-known geological characteristics.
The utilisation of captured CO2 will remain a minor part of this emerging industry, Cibrario highlighted – 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, according to Cibrario: 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.
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,
… stated Michael Cibrario
However, one significant distinction between the oil and gas industry’s risk coverage and the growing carbon storage industry is time. Oil and gas have a time range of at most 50 years from exploration to well depletion, says Cibrario. However, safe carbon storage may necessitate risk mitigation for hundreds of years.
Changes in taxation and increased regulation are expected in the future years. These will increase pressure on the fossil fuel sectors while also hastening the development of CCUS technology and facilities. The global reinsurance business will play a key part in the CCUS energy transformation, Cibrario concludes.
To remind, Lloyd’s Register, on the subject of onboard carbon capture had claimed that the adoption of onboard carbon capture systems is dependent on the economic feasibility for maritime supply chain stakeholders.
