The broker states that adequate insurance provision for greener technologies is lacking

Broker Marsh has launched a facility providing insurance and reinsurance capacity for new and existing green and blue hydrogen energy products.

According to British utilities company National Grid, green hydrogen is produced without creating harmful greenhouse gas emissions. It is made by using clean electricity from surplus renewable energy sources, such as solar or wind power, to electrolyse water. Blue hydrogen, on the other hand, is produced mainly from natural gas using a process called steam reforming.

Marsh stated that traditionally, it has been challenging for market participants to secure adequate insurance for these emerging technologies, however its new facility - developed in partnership with insurers Liberty Specialty Markets and AIG - will provide up to $300m (£246m) of cover per risk for the construction and startup phases of hydrogen projects globally.

Risks included in the facility are marine cargo, business interruption (BI), general third party liability and contingent delay in startup insurance.

According to research by Goldman Sachs, published on 4 February 2022, global hydrogen generation is expected to reach $1tr (£819.7bn) by 2050 as businesses race to meet their carbon reduction obligations.

Furthermore, the UK government’s British energy security strategy, published in April 2022, doubled the country’s hydrogen production ambition up to 10 gigawatts (GW) by 2030.

Energy goals

Andrew George, global head of energy and power at Marsh Specialty, said: “As the global hydrogen industry, especially green hydrogen, scales up rapidly to meet demand, [Marsh’s] facility will reduce the complexity of securing risk transfer options for operators of all sizes and boosts investor and lender confidence in achieving their ambitious project timeframes.

“Marsh continues to make significant investments in supporting the diversification of energy systems and is challenging insurance markets to keep pace and improve risk management approaches and choices.

“We are committed to working with investors through all phases of their projects to support their energy transition goals.”

  • Insurance Times has converted dollar amounts into pounds using an exchange rate of £1 = $1.22, which was correct as of 1 August 2022.