Climate engineering insurance

Category: Emerging risks · Reviewed by Tim Roche, Director · PI & Commercial · Last reviewed 2026-06-10

Climate engineering insurance is a nascent class of speciality cover addressing the operational, professional indemnity, environmental impairment and product-performance exposures of organisations developing solar radiation management (SRM) and carbon dioxide removal (CDR) technologies as part of the United Kingdom’s pathway to net zero.

Climate engineering (or geoengineering) divides into two broad families: SRM, which reduces incoming solar radiation, principally through stratospheric aerosol injection or marine cloud brightening; and CDR, which removes atmospheric carbon dioxide through direct air capture (DAC), enhanced rock weathering, ocean alkalinity enhancement and bioenergy with carbon capture and storage (BECCS). Insurance market interest is concentrated on CDR, where commercial deployment is most advanced and is supported by HM Government’s Greenhouse Gas Removals Business Model. See also Geoengineering liability insurance.

Definition

Climate engineering insurance covers:

• Operational property and business interruption for DAC facilities, BECCS plants and enhanced weathering operations.
• Professional indemnity for technology providers, climate consultancies and carbon project developers.
• Environmental impairment for inadvertent pollution events.
• Reversal and non-delivery cover for removed-tonne carbon credits.
• Construction all risks for first-of-a-kind plant.

It is distinct from broader climate change insurance and from carbon-credit “buffer pool” arrangements.

Legal and regulatory basis

The UK statutory and policy framework includes:

• Climate Change Act 2008 — net zero target by 2050 (amended 2019).
• Environment Act 2021 — environmental principles and Office for Environmental Protection oversight.
• Energy Act 2023 — provisions on carbon capture, usage and storage (CCUS) revenue support and economic licensing.
• Greenhouse Gas Emissions Trading Scheme Order 2020 (SI 2020/1265) — UK ETS.
• Industrial Carbon Capture Business Model and Greenhouse Gas Removals Business Model — HM Government / Department for Energy Security and Net Zero contracts.
• FCA Handbook ICOBS and PROD 4 — distribution standards (see ICOBS).

International instruments include the London Protocol 1996 (marine geoengineering) and the Convention on Biological Diversity decisions on geoengineering (2010, 2016).

How it works in practice

Climate engineering wordings are typically placed as:

1. Construction all risks for DAC and BECCS plant during construction and commissioning.
2. Operational property and BI post-commissioning, with specialist energy markets.
3. Carbon delivery and reversal cover addressing the obligation to deliver high-quality removed-tonne credits, with parametric or indemnity triggers.
4. Professional indemnity for project developers, registries and validation and verification bodies operating under ICVCM Core Carbon Principles.
5. Environmental impairment for accidental release of captured CO2 or sorbent chemicals.

Common variations and subsequent developments

• Reversal insurance — bespoke wordings backing buffer pools maintained by carbon registries (Verra, Gold Standard, Puro.earth) and the proposed UK Voluntary Carbon Market integrity framework.
• Storage liability — long-tail liability for stored CO2 in saline aquifers and depleted hydrocarbon reservoirs under Energy Act 2008 storage permitting.
• First-of-a-kind risk — premium loadings for novel CDR technologies without operational track record.
• Geneva Association reports — successive 2021 to 2024 papers on insurability of climate intervention technologies.

Example

A UK DAC developer constructs a 100,000 tonne/year facility with USD 250 million capital cost, supported by a contract under the Greenhouse Gas Removals Business Model. The construction all risks programme covers the build phase, followed by operational property and BI for the 25-year operating life. A separate carbon delivery and reversal policy backs the buyer-side credit obligations, paying out on a parametric trigger if measured storage falls below contract tonnage by more than 5 per cent. Professional indemnity covers the MRV (measurement, reporting and verification) work performed by an accredited validation and verification body.

See also

• Geoengineering liability insurance
• Climate change insurance
• Parametric insurance
• Pool Re
• Flood Re
• ICOBS

References

• Climate Change Act 2008 (as amended), legislation.gov.uk.
• Environment Act 2021, legislation.gov.uk.
• Energy Act 2023, legislation.gov.uk.
• HM Government / DESNZ, “Greenhouse Gas Removals Business Model” consultation and response (2022–2024).
• HM Government, “Net Zero Strategy: Build Back Greener” (October 2021).
• Geneva Association, “Insuring Climate Intervention” (2024).
• Lloyd’s, “Future Set: Emerging Risk — Climate Intervention” briefing.
• London Protocol 1996, amendments on marine geoengineering (2013).
• Convention on Biological Diversity, decisions IX/16, X/33, XIII/14 on geoengineering.

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This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.

Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.