Construction and Delivery Risks in UK Carbon Capture and Storage Projects
The Government has announced up to £21.7bn in support for the UK’s first carbon capture and storage (CCS) projects in Merseyside and Teesside, aiming to create thousands of jobs, attract private investment, and help achieve climate targets. CCS is internationally recognised as a critical technology for mitigating climate change, but UK carbon capture and storage projects need careful risk management in this growing sector.
UK carbon capture and storage projects are internationally recognised as a critical component in the transition to a lower‑carbon economy. However, the scale, complexity, and relative novelty of CCS infrastructure mean that developers, contractors, and investors must carefully assess construction, operational, and long-term risk exposure.
Effective risk management for CCS projects requires comprehensive planning, early stakeholder engagement, robust environmental impact assessments, and clear contingency measures. Construction insurance for complex infrastructure projects, developed in consultation with experienced brokers, play a key role in controlling exposure and supporting project viability.
Carbon capture and storage technology captures emissions from fuel combustion and industrial processes – such as cement production – and stores them permanently underground, often in depleted offshore oil and gas fields. The technical, environmental, financial, and regulatory complexity of UK carbon capture and storage projects introduces a wide range of risks that must be addressed from the outset.
What Is Carbon Capture and Storage (CCS)?
Carbon capture and storage involves capturing carbon dioxide emissions at source, transporting the CO₂ via pipelines or ships, and storing it securely in deep geological formations. The objective is to prevent emissions from entering the atmosphere while enabling continued industrial activity in hard‑to‑abate sectors.
Key Construction Risks in Carbon Capture Projects
Technical Risks
Technical risks in carbon capture and storage projects include achieving efficient CO₂ capture from industrial processes, ensuring the long-term integrity of storage sites, and managing the safe transportation of CO₂. Pipelines, shipping infrastructure, and compression facilities all introduce potential failure points that must be carefully engineered and maintained.
As CCS technology continues to evolve, organisations involved in UK carbon capture and storage projects must also assess technology maturity and integration risks, particularly where novel systems or untested configurations are deployed.
Environmental Risks
Environmental risks associated with carbon capture and storage projects include the potential for CO₂ leakage from storage reservoirs, which could contaminate groundwater or impact marine and terrestrial ecosystems. There is also a risk of induced seismic activity resulting from CO₂ injection into geological formations.
In addition, the full lifecycle emissions of CCS developments must be considered. Capture, compression, and transportation processes can be energy‑intensive, which may reduce net emissions benefits if not carefully managed.
Regulatory and Economic Risks
Permitting and regulatory compliance for UK carbon capture and storage projects can be complex, with evolving requirements at local, national, and international levels. Long-term liability and financial uncertainty mean that insurance support for project developers and sponsors is often a critical consideration in securing funding and long-term project viability.
Economic viability may also be affected by changes in carbon pricing, government incentives, emissions targets, and broader energy policy, all of which can influence project financing and investment decisions.
Social and Stakeholder Risks
Public perception and community acceptance are critical factors in the success of carbon capture and storage developments. Concerns over safety, environmental impact, and long‑term storage reliability can lead to opposition from local communities and environmental groups.
Developers must also navigate land access, property rights, and infrastructure routing challenges, particularly for pipelines and transportation corridors. Reputational risk may arise if projects are perceived as ineffective or misaligned with wider sustainability objectives.
Operational Risks
Once operational, UK carbon capture and storage projects require continuous monitoring of storage sites to detect and prevent leaks. Capture, compression, and transportation infrastructure must be regularly maintained to ensure safe and reliable performance throughout the project lifecycle.
Operational resilience can also be affected by supply chain risks, including the availability of specialist equipment, materials, and technical expertise. Disruptions may delay delivery timelines and increase overall costs.
Geopolitical Risks
For cross‑border carbon capture and storage initiatives, geopolitical risks may arise from differing regulatory regimes, political priorities, and international agreements. These factors can complicate approvals, financing, and long‑term operational coordination.
While international collaboration is often essential for the success of large‑scale CCS deployment, it can also introduce additional complexity in governance, decision‑making, and risk allocation.
Managing Risk in Large‑Scale Energy Infrastructure
Given the scale and complexity of UK carbon capture and storage projects, effective risk transfer and insurance planning are essential. Tailored insurance solutions can help manage construction, operational, environmental, and liability exposures throughout the project lifecycle.
Early engagement with specialist insurance brokers enables developers and contractors to identify risk gaps, structure appropriate coverage, and support lender and investor confidence.
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