2009-07-08

By Editor, CIR

Zurich Financial Services says it is processing four submissions from companies for carbon capture and storage insurance cover.

According to Reuters, the Swiss insurer's chief climate product officer Lindene Patton said that companies in Europe, United States, Australia, China and Japan were also expressing interest in the cover. He declined to name the companies involved and said it was too early to reveal the cost of any potential policies.

Carbon capture and storage (CCS) enables the harmful greenhouse gas carbon dioxide (CO2) to be captured from power stations and then stored underground to prevent it from entering the atmosphere. Zurich Financial Services launched two insurance products in January to cover liabilities during the operational life of CCS facilities and funding for after the plants close.

The European Union plans to get 10 to 12 commercial scale CCS demonstration plants up and running by 2015. However, low carbon prices and high development costs for the new technology make it difficult for CCS to be developed for full-scale commercial use without government funding.

"So much coal is burnt that in the absence of CCS we will not meet the 2050 reduction goals. Without insurance, even if companies get subsidies, we won't get a deployment of the technology," Patton said.

John Scott, head of risk insights at Zurich Global Corporate, added: "Operators need certainty. It is difficult as a business person to make any long-term investment decisions unless you have certainty about the costs of risks."

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