Marsh discloses coverage of carbon sequestration risks

Marsh LLC launched a hedge on Thursday to address various risks associated with Canopius Group Ltd.-backed carbon dioxide storage and transportation projects globally.

The cap is designed to enable upstream energy operators to meet their financial security obligations when the captured CO2 is transported and injected into suitable geological structures.

Traditional insurance coverage for these risks requires physical damage or interruption of operations caused by an out-of-control well for the policies to respond, Marsh said.

Marsh coverage adds a non-damage trigger for geologic CO2 leakage, providing for the costs of remedial action, and a trigger for associated business interruption.

It also includes covering the costs incurred for the purchase of carbon credits for the mass of CO2 leaked, where appropriate for the geography of the project. This coverage is available along the removal chain, whether the release occurs from scheduled onshore facilities, the CO2 pipeline or ship, or from the storage complex.

Limits are customized based on project need, but the indicative limit is €200 million ($219.5 million) for Canopius’ carbon credit exposure.