As carbon capture and storage (CCS) moves from pilot projects into large-scale commercial deployment, the insurance industry is being pushed into new territory. The sector carries a blend of construction, operational, environmental, financial and regulatory exposures that simply don’t fit inside traditional insurance structures.
For companies relying on CCS to meet climate goals and secure federal incentives, the stakes are high. So too is the demand for insurance solutions that match the complexity of the work. Speaking to Insurance Business, Eric McCabe, divisional senior vice president at Great American Insurance Group Environmental, revealed that these risks are also rapidly evolving.
“As carbon capture and storage projects scale up, the risks become more layered and significant. Traditional insurance often doesn’t account for the full spectrum of exposures, especially when it comes to the intersection of environmental, financial and regulatory challenges.”
For example, a CCS facility isn’t just managing the risk of a pollution event or a construction mishap; it’s also navigating the complexities of qualifying for federal tax credits, maintaining compliance and protecting investor interests.
“A single leak or a failed audit can have ripple effects, threatening both environmental goals and financial viability,” added McCabe. “The industry is seeing a need for coverage that’s as comprehensive as the projects themselves, addressing everything from construction and operational risks to the intricacies of tax credit compliance.”
To meet this need, forward-thinking insurers are developing coordinated products that follow the full arc of a CCS project. Instead of placing separate policies with different carriers for construction, operations, environmental liability and tax credit exposure, the emerging model brings all of these functions together under one roof.
Roy Reynolds, divisional president of mergers & acquisitions liability at Great American, told IB this new client expectation is sparking a transformation.
“Insurers are responding by developing integrated solutions that span the entire lifecycle of a CCS project. Rather than obtaining separate policies from multiple carriers, there is a need for collaborative underwriting.”
As Reynolds told IB, Great American has assembled specialists from its environmental, specialty construction, and mergers & acquisitions liability divisions to craft complementary coverage that’s tailored to an insured’s unique risks and operations.
“One integrated solution can provide coverage that follows a project from start to finish, spanning construction, operation and the complexities of tax credit qualification and regulatory compliance,” added Reynolds. “This approach means clients benefit from specialized knowledge at every stage, with coverage that adapts as the project evolves. The goal is to ensure that no matter where a risk arises, whether it’s during construction, day-to-day operations, or in the midst of a regulatory review, the right protections are in place.”
CCS projects rely not only on environmental performance but also on compliance with tax credit requirements. The financial model of many developments depends on capturing federal incentives, meaning a single misstep can destabilize years of planning.
Devorah Pomerantz, divisional senior vice president - head of tax for Great American mergers & acquisitions liability, outlined to IB several scenarios that show just how severe the consequences can be when coverage is fragmented.
“Imagine a company invests heavily in CCS infrastructure, only to discover after the fact that it doesn’t qualify for the tax credit due to a technicality - perhaps they missed a compliance step. Without coverage, the financial loss could be devastating as the anticipated credits may have been factored into the project’s funding and investor commitments.
McCabe added, “Another potential scenario is that a facility installs a new CO₂ storage tank, but construction activities inadvertently puncture an old well, resulting in oil leakage and millions in remediation expenses. If the company lacks contractors’ pollution liability coverage, it could be forced to scale back operations, lay off staff or even face bankruptcy.”
And even after construction, risk persists. As Pomerantz told IB, there’s also an ongoing risk of carbon leakage from underground storage, which can trigger not only environmental cleanup costs, but also the loss or recapture of previously claimed tax credits.
“In each case, the absence of integrated coverage exposes the company to cascading financial, legal and reputational risks that could threaten the viability of the entire project,” she added.
As the CCS industry grows, specialty insurance is doing more than protecting against loss, going so far as to actively strengthen operational reliability and environmental stewardship. Here, McCabe insists that the industry’s evolution is entirely deliberate.
“Insurance solutions are evolving to support environmental commitments in practical, measurable ways. By integrating coverage for construction exposures, environmental risks and tax credit compliance, insurers are helping companies safeguard both their financial interests and their environmental goals.”
He points to rapid-response features that help companies maintain regulatory standing and protect stored carbon.
“Many comprehensive policies often include emergency and remedial response coverage, enabling companies to respond quickly to leaks or spills, contain the damage, restore the site and maintain regulatory compliance.”
And for those early adopters, this creates an intriguing strategic advantage.
“This kind of risk management isn’t just about avoiding losses, it’s about creating a foundation for growth and innovation,” added McCabe.
Great American Environmental is a trusted leader in environmental risk management. Comprised of seasoned experts, the division specializes in uncovering hidden environmental exposures within client operations and designing customized insurance programs that provide robust protection. Coverage spans a wide range of commercial operations—addressing both new and historical conditions, on- and off-site risks, and gradual or sudden events, ensuring comprehensive solutions for complex challenges.
Great American Environmental was established in 2008 and is one of the few carriers that has consistently served this specialized market. The division’s reputation is built on specialized underwriting, timely claims handling, and exceptional service, making it the provider of choice for brokers and insureds nationwide.
Beyond risk transfer, Great American Environmental is committed to helping clients achieve operational resilience and long-term success. By combining deep industry expertise with innovative coverage solutions, the team works strategically to protect businesses against uncertainty and support growth in an evolving risk landscape.
Disclaimer
For agent/broker use only. The insurance products described may not be available in all states. The claims scenarios in this material are provided to illustrate possible exposures faced by your clients. The facts of any situation which may actually arise, and the terms, conditions, exclusions, and limitations in any policy in effect at that time, are unique. Thus, no representation is made that any specific insurance coverage applies to the above claims scenarios. Coverage is summarized. Refer to the actual policy for a full description of applicable terms, conditions, limits and exclusions. Policies are underwritten by Great American Insurance Company, an authorized insurer in all 50 states and DC, and Great American E&S Insurance Company, an OH domiciled surplus lines insurer, eligible to underwrite surplus lines insurance in all 50 states and DC, 301 E. Fourth St., Cincinnati, OH 45202. This is not intended as a solicitation or offer to sell an insurance product in a jurisdiction in which the solicitation, offer, sale or purchase thereof would be unlawful.
This article was created in partnership with Great American Insurance Group.
