Oil giant says insurers will be reluctant to cover new technology
Insurers will be reluctant to cover projects that capture carbon emissions and store them permanently underground, or they may charge “large risk premiums”, according to Royal Dutch Shell.
“Insurance will be able to address only part of the financial risk exposure,” Shell said in a report on its planned Peterhouse Carbon Capture & Storage (CCS) project that the company posted on the Department of Energy & Climate Change website.
“As the risk can currently neither be defined nor quantified, no insurance solutions are available,” Shell said.
Though many of the risks involved in CCS are similar to existing upstream oil and gas projects, and much of the technology used is conventional, insurers are likely to be wary of what they see as new technology, the report said.
“The lack of available underwriting information, including the absence of claims history, limited number of CCS projects over which to spread their risk, and undefined liabilities make it difficult for insurers to price the risk, and may thus cause reluctance to underwrite the risk or result in large risk premiums,” the oil giant said.
Shell and power generator SSE plan to pump emissions from SSE’s Peterhead gas-fired power plant north of Aberdeen into the depleted Goldeneye gas field under the North Sea for permanent storage.