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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 companies must carefully assess risk management in this growing sector. Effective risk management requires comprehensive planning, stakeholder engagement, environmental impact assessments, and contingency measures to ensure CCS projects successfully reduce carbon emissions while minimising potential downsides. Robust insurance, developed in consultation with a specialist broker, is essential for managing these risks and controlling exposure. CCS captures emissions from fuel combustion and industrial processes, such as cement production, and stores them permanently underground, often in disused oil fields beneath the sea. Due to the technical, environmental, financial, and regulatory complexities, assessing CCS projects involves addressing numerous key risk factors.

Technical Risks:                                                                                                                                                                                                                                                                                                                                                                              Technical risks in carbon capture and storage (CCS) include ensuring the efficiency of CO2 capture from industrial processes, maintaining the integrity of long-term storage to prevent leaks, and managing risks associated with transporting CO2 via pipelines or ships. Additionally, the evolving nature of CCS technology requires careful evaluation of its maturity to minimise the risk of project failures.

Environmental Risks:
Environmental risks in carbon capture and storage (CCS) include the potential for CO2 leakage from storage sites, which could contaminate groundwater or harm local ecosystems, and the possibility of induced seismic activity from injecting CO2 into geological formations. Additionally, the full lifecycle emissions of a project, including energy use and transportation, must be considered, as the CCS process can be energy intensive.

Regulatory and Economic Risk:
Permitting and compliance for carbon capture and storage (CCS) projects can be complex due to evolving regulations at various levels, while long-term liability for monitoring and addressing potential environmental issues remains unclear. Additionally, fluctuations in carbon pricing and policy changes, such as adjustments to emissions targets or subsidies, can impact the financial viability of CCS projects.

Social and Stakeholder Risks:
Public perception and acceptance of carbon capture and storage (CCS) projects can be hindered by concerns over safety, environmental impact, and long-term storage risks, particularly from local communities and environmental groups. Securing land use and property rights for storage sites and transportation infrastructure may lead to disputes with landowners, while companies must also manage reputational risks related to the perceived effectiveness of the project and its alignment with sustainability goals.

Operational Risks:                                                                                                                                                                                                                                                                                                                                                                              Ongoing monitoring of CO2 storage sites is essential to ensure there are no leaks, along with regular maintenance of the capture and transportation infrastructure, to guarantee the long-term success of carbon capture and storage (CCS) projects. Additionally, supply chain risks, such as interruptions in the availability of materials or technology, can delay project timelines and affect overall performance.

Geopolitical Risks:
Cross-border carbon capture and storage (CCS) projects face complications due to geopolitical risks and differing regulations between countries, which can hinder implementation and operational continuity. Furthermore, international collaboration among governments, organisations, and private companies is often essential for these projects, yet it can also present challenges in coordination and cooperation.

 

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