Global insurance provider Zurich Insurance Group and risk capital and human capital solutions provider Aon announced the launch of a new clean hydrogen insurance facility, providing coverage for blue and green hydrogen projects with capital expenditures of up to $250 million.

Hydrogen is viewed as one of the key building blocks of the transition to a cleaner energy future, particularly for industrial and transport sectors with difficult to abate emissions, in which renewable energy solutions such as wind or solar are less practical.

Global hydrogen production capacity is currently around 94 million tons, although the vast majority is produced through natural gas reforming and coal gasification, which are highly carbon intensive, generating over 1 GT of CO2 emissions per year. Current solutions to reduce the emissions footprint of hydrogen include green hydrogen, which uses a renewable energy-powered electrolysis process to extract hydrogen from water, and blue hydrogen, produced by converting natural gas into hydrogen and CO₂, which is then captured and permanently stored.

The development of clean hydrogen capacity, however, will require massive investments in areas including infrastructure, electrolysis, and transport.

According to Zurich and Aon, the new insurance facility is being launched following extensive research and engagement with customers on their needs and challenges in developing clean hydrogen projects, with Joseph Peiser, Global CEO of Commercial Risk at Aon noting that “many developers and their capital providers have found it challenging to de-risk and secure adequate insurance coverage for the various phases of global hydrogen projects.”

Peiser added:

“This new solution caters to their unique needs, providing comprehensive coverage addressing the complex risks associated with hydrogen projects across the entire project life cycle.”

The new facility offers coverage across the hydrogen production value chain through a single policy in areas including construction, delay in start-up, operational cover, business interruption, marine cargo limits, and third-party liability, in addition to coverage for carbon capture, utilization, and storage (CCUS) technologies.

According to the companies, the facility has already seen strong demand, and has already been oversubscribed by the participating insurers.

Sierra Signorelli, CEO Commercial Insurance at Zurich, said:

“Insurance is a key enabler to facilitate the net-zero transition, providing protection as well as risk expertise. Clean hydrogen has immense potential as an eco-friendly alternative to fossil fuels and we strongly believe it can play a critical role in the energy transition.”