Carbon capture risks may store up problems

Expert lawyers have warned a move into carbon capture and storage will come with a need to understand the changes to a business’ risk profile.

Nigel Brook, partner, Clyde & Co and Jayde Pulford, trainee solicitor at the law firm said the rapid changes in the technology and its crucial role in the efforts to meet  net zero targets make carbon capture and storage an attractive option for companies but the need to understand the risk that accompany the sector.

“Scientists recently uncovered a new method of carbon capture and storage (CCS) that reduces the energy used,” Pulford explained. “This novel approach to reducing global carbon dioxide (CO2) emissions could result in a boost in investment in CCS that would accelerate development of new facilities.

“Carbon capture technologies enable polluting industries to capture some of the CO2 emissions they generate. The captured CO2 can then be reused or stored. Further developments in this space have also resulted in direct air capture (DAC) technology, which removes previously emitted CO2 directly from the atmosphere.

Brook explained this latest DAC research, carried out by researchers at Lehigh University in Pennsylvania, found the amount of energy used in DAC can be greatly reduced by using a polyamine resin, which can absorb up to three times the amount of CO2 compared with other methods. With the addition of other chemicals, the CO2 is transformed into sodium bicarbonate which can then be safely stored in seawater.

“Experts believe that DAC is vital for limiting the rise in global temperatures; it will enable the removal of historic CO2 from the atmosphere and could assist in the management of unavoidable CO2 emissions, such as that from long-distance transport,” He continued. “In the UK, government support for its use is growing, because it is seen as essential for the UK’s plans to achieve net-zero greenhouse gas emissions by 2050. However, CCS processes are not hazard-free. There is a need for the risk management and insurance communities to understand the inherent property and liability exposures, and the potential legal and regulatory risks.”

Brook said: “Whether in the construction of new facilities, or retrofitting of existing operations, carbon capture technology requires dedicated storage tanks to enable separation of CO2 from other gases. The separation process has specific technical risks related to the compression and cooling of gases flowing through pipes and the use of chemical solvents. As with many chemical processes, fire and explosion are inherent risks. When the technology is retrofitted to industrial clusters or high-hazard facilities such as power stations, the risk of accidental damage and the subsequent fire and explosion risk is enhanced.

“There are also risks involved in storing the captured CO2. Most significant is the potential for leakage, which could have a negative environmental and human impact; a major concern is that CO2 could leak from underground reservoirs, re-entering the air or leaching into nearby water sources. Leakages could occur from the cracking of steel pipes and storage tanks, caused by CO2 being stored at low temperatures, or through corrosion of pipes, which can occur if CO2 stored in its gaseous state comes into contact with aqueous liquids, forming carbonic acid.

“The way CO2 is stored can positively alter its risk profile. When dissolved into water and transported in liquid form, it is less prone to leakage. Alternatively, projects such as the Climeworks/Carbfix joint venture in Iceland mix CO2 with water and inject it into basaltic rock where it gradually mineralises, eventually turning into stone. Researchers working on the ENOS CO2 storage project in Europe suggest there is a slight risk that sub-surface injection of CO2 could cause a pressure build-up, potentially resulting in tremors. However, they argue that the magnitude of such events is so small, the risk of any tremors at the surface is negligible.”

Aside from the short-term property, environmental or public health liability exposures of CO2 leakage, there is a longer-term consideration of who would be liable for issues that arise at sites used for carbon sequestration after the operational period ends, Pulford added.

“There are also reputational, regulatory and legal risks attached to CO2 capture,” she explained. “In an era of transition from a fossil-fuel based economy, over-reliance on CCS by major polluters, or the use of fossil fuel energy to power the CCS process, could lead to accusations of greenwashing and potential legal action.

“Risk managers and insurance and broking partners of industrial firms expanding or diversifying into CO2 extraction and storage will need to carefully reassess their risk profiles for likely exposure changes. As with any innovative area, investments in new CCS equipment and emerging CCS technologies may drastically alter property and liability exposures and will need to be rigorously underwritten.”