Associate professor at Reading School of Law: 'Ensuring safe deployment of carbon capture through minimization of leakage must remain a priority'

A 2022 study, conducted by Associate Professor Dr. Kyriaki Noussia, Dr. Catherine Caine and Whitney Richardson, emphasizes the need for "robust" amendments to insurance law and international environmental law to facilitate legal carbon capture, utilization and storage (CCUS) in the fight against global warming. The research highlights the importance of developing European Union carbon capture regulatory frameworks to encourage safe expansion and usage of the technology within Europe.

According to the research, published in the European Energy and Environmental Law Review, the safe expansion and utilization of CCUS within the European Union (EU) necessitate the development of new regulatory frameworks. For years, the transportation and storage of CO2 have existed in a legal gray area under international environmental law. The absence of explicit authorization or prohibition has left those seeking to transport CO2 across international borders uncertain about their legal standing.

Slow and complex processes involving multiple countries' approvals have further hindered the introduction of amendments to address this issue effectively. To confront this regulatory conundrum, the study posits that establishing a robust liability framework for CO2 capture, usage and storage could be the crucial first step. The research was conducted by Noussia from the University of Reading, Caine from the University of Exeter and Richardson from the Chicago-Kent College of Law.

Noussia underscored the importance of prioritizing safe CCUS deployment and minimizing leakage to enhance climate change mitigation efforts.

"Ensuring safe deployment of carbon capture through minimization of leakage must remain a priority, to supplement climate change mitigation efforts and get the most benefits from this technology’s deployment," she said, according to the University of Exeter.

To encourage insurability and alleviate the burden on public funds, the researchers proposed capping insurance and general liability. However, governments may be hesitant to accept amendments that impose higher financial responsibilities, even if the risk of significant leakage is deemed unlikely. The study further advocates for individual nations to retain autonomy in deciding whether to allow CCUS operations within their territories.

Insurance plays a pivotal role in creating a safety mechanism for carbon capture technology and bolstering climate change efforts. The researchers argue that existing property casualty policies' "sudden" and "unexpected" loss coverage may not adequately address environmental pollution incidents. Considering the growing threats and frequency of cyber risks, the study suggests the necessity of specific and separate coverage for cyber terrorism and cyber risks. By doing so, a "soft" insurance market can be reestablished, fostering wider adoption of carbon capture technologies.

To mitigate risks, the study recommends exploring risk-sharing agreements or implementing a pool system that allows operators to share each other’s losses. In this system, operators would both be insured and insurers. Additionally, financial guarantees from third-party companies or institutions could offer added protection to operators.

Governments also have a role to play in establishing minimum safety standards for carbon capture, use and storage. Once these standards are in place, the insurance market can respond more effectively to support the deployment of CCUS technology.

As global efforts intensify to combat climate change, this study underscores the importance of creating a comprehensive legal and insurance framework for carbon capture technology. By implementing "robust" amendments to insurance and international environmental laws, nations can collectively take a major stride toward achieving a sustainable and greener future.