Carbon Capture Is Ready. But Are Insurance Companies Ready?
- Dr Kevin Ho
- 13 minutes ago
- 3 min read
When people think about Carbon Capture and Storage (CCS), they often focus on the technology.
Can we capture carbon dioxide from factories? Can we transport it safely? Can we store it underground for decades without leakage?
These are important questions, but according to a recent industry report, they may no longer be the biggest obstacle.
The real challenge could be something far less obvious: insurance.
The Technology Is Advancing
CCS is increasingly viewed as an essential decarbonisation tool, particularly for hard-to-abate industries such as cement, steel, chemicals, and waste-to-energy facilities.
For these sectors, reducing emissions through renewable energy alone may not be sufficient. Capturing carbon emissions before they enter the atmosphere may be one of the few practical pathways to achieving net-zero targets.
In Malaysia, this is particularly relevant. The country has committed to reducing its carbon intensity by 45% by 2030 compared to 2005 levels. Achieving this target will require a combination of solutions, and CCS is expected to play an important role.
Why CCS Is Different
Unlike many industrial projects, CCS involves a chain of interconnected activities.
Carbon dioxide must be captured at the source, compressed, transported, and ultimately stored underground. Each stage may be managed by different companies, operating under different contracts and potentially even across different jurisdictions.
This creates a unique challenge.
If a problem occurs at any point in the chain, the impact can ripple through the entire system. A storage facility shutdown could affect multiple emitters. A transportation issue could delay regulatory compliance. A leakage incident could trigger environmental liabilities and financial penalties.
In other words, CCS is not just a technology project. It is a complex risk management exercise.
Why Insurance Matters
Investors and lenders generally do not fund projects based solely on technical feasibility. They also want confidence that risks are understood, managed, and financially protected.
For CCS projects, some key questions include:
What happens if stored carbon dioxide leaks?
Who is responsible if emissions are not permanently stored?
What if a technology provider fails to deliver promised performance?
What happens when one party in the CCS value chain causes losses to another?
Without clear answers, securing financing becomes much more difficult.
This is where insurance becomes critical.
New insurance products are emerging to address carbon leakage, technology performance failures, environmental liabilities, and even disruptions that occur across multiple parties within the CCS value chain.
The goal is simple: make CCS projects bankable.
A Bigger Challenge for Asia
Countries such as the United Kingdom and Norway have invested billions of dollars in supporting CCS development. Government funding helps absorb some of the risks that private investors might otherwise avoid.
In much of Asia, however, government support is expected to be more limited.
This means the private sector will likely carry a greater share of the risk. As a result, insurance providers, financial institutions, project developers, and industrial companies will need to work closely together to develop credible risk-sharing frameworks.
Without these frameworks, many projects may struggle to move beyond the planning stage.
The Missing Piece of the Net-Zero Puzzle
The discussion around carbon capture often focuses on engineering breakthroughs and storage capacity. Yet the ability to manage and transfer risk may ultimately determine whether CCS scales successfully.
The technology is improving.
Capital is available.
Regulatory pressure is increasing.
What remains is the development of a mature risk ecosystem that gives investors, lenders, and project developers the confidence to proceed.
As Malaysia and the wider Southeast Asian region continue their transition towards a lower-carbon economy, insurance may prove to be one of the most important enablers of carbon capture deployment.
The future of CCS may depend not only on how well we capture carbon, but also on how well we manage the risks that come with it.
To learn more, click here for the full article: https://theedgemalaysia.com/content/advertise/scaling-carbon-capture-and-storage-closing-the-risk-gap
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