Carbon capture and storage investment in Asia is projected to reach US$622 billion by 2050. Yet only 20% of capture capacity announced globally for 2030 is operational.
As the world races towards net-zero emissions by 2050, the pressure to cut carbon footprints has never been greater. In Asia, governments are tightening related policies, with Singapore raising its carbon tax and Japan proposing similar measures to encourage companies to cut emissions. For hard-to-abate industries including oil and gas, steel, cement, and petrochemicals, which are hard to decarbonise, carbon capture and storage (CCS) is becoming a vital part of the solution.
In Asia Pacific alone, investments in CCS are projected to reach a staggering US$622 billion by 2050. Despite this, securing financing and reaching Final Investment Decisions (FID) remain major obstacles. Globally, the number of CCS project announcements is far higher than the number of actual projects being developed; as a result, only 20% of the capture capacity announced for 2030 is operational or has reached FID. The difficulty in securing third-party capital leads to project delays or cancellations compounded by misunderstood risks, murky regulations, and nascent end markets. In the long run, this could undermine Asia’s decarbonisation efforts.
Understanding the risks behind CCS projects — and how they can be managed — will be critical to unlocking access to capital and advancing projects.
Why do project owners struggle to secure financing for CCS projects?
High costs of developing CCS at current carbon prices are prohibitive
Funding for CCS projects remains limited because the required scale of investment is large. In Southeast Asia, CCS is estimated to cost US$60–120 per tonne of CO2 stored and could rise to around US$150 per tonne if not managed effectively. Even if regional carbon prices rise to Singapore’s projected S$50–80 per tonne by 2030, a significant gap could persist, potentially impeding CCS project viability.
Low investor confidence due to lack of long-term revenue predictability
CCS projects face multiple sources of financial uncertainty that make them difficult investment propositions. Beyond substantial upfront capital requirements, their future returns are highly sensitive to changes in regulation and policy that can materially alter returns. Project owners also confront unclear and volatile carbon pricing, shifting regulatory regimes, and the technical and legal complexities of transporting and storing CO2 across borders. Together with evolving carbon markets and broader economic volatility, these factors increase perceived risk, widen financing gaps, and hinder the ability to evaluate and secure long-term returns.
Underperformance of technology in capture facilities
One of the biggest worries for investors is when carbon capture technology doesn’t perform as expected. Scaling these technologies is new territory for Asia, and more than 50% of large-scale global projects are operating below their designed capacity.
When capture facilities underperform, carbon capture volumes fall, reducing potential revenue and carbon-credit generation. This can throw off contracts and financial plans, making it harder to keep projects on track. To add, the complexity of the carbon capture process — from capture to transport and storage — further complicates risk allocation, making it difficult to find insurance solutions that cover all exposures.
How risk management across the CCS project lifecycle builds resilience to unlock financing
Identifying risks across the CCS projects early and allocating them appropriately among stakeholders helps reduce uncertainty and improve insurability, strengthen investor confidence, enabling projects to advance on schedule, and ensuring they perform reliably over time.
Early project stage: Strengthen investor confidence
Risk insurability analysis: Early-stage risk assessments and staying up to date with changing regulations help quantify exposures and establish clear risk profiles. This provides investors and lenders greater clarity on project viability, while identifying which risks can be insured and where other risk transfer solutions may be required. By turning uncertainty into measurable and manageable risks, organisations can attract capital and build investor confidence.
Design and development stage: Build climate resilience
Climate risk modelling: In the next stage, understanding exposures to catastrophe risk becomes crucial, particularly as climate change accelerates the frequency and severity of certain perils. As many CCS facilities are in areas exposed to extreme weather or seismic activity, assessing these hazards early allows developers to strengthen infrastructure resilience and incorporate mitigation measures into project design.
Demonstrating engineered resilience through risk engineering design review in early stages of the project can help critical assets fortify against extreme natural perils to improve insurability and enable organisations to secure more favourable terms in the long term.
Construction delays: Construction-related risks can also be addressed through construction-all-risks and delay-in-start-up insurance, providing additional financial protection during project development. Surety solutions can further strengthen financial stability by ensuring that funds are available to meet contractual obligations while preserving liquidity.
Operational stage: Protect technology performance and revenue streams
Business continuity: Once operational, projects face risks such as physical damage that can disrupt operations. Business interruption coverage can safeguard revenue streams, while performance guarantee parametric insurance and carbon credit insurance address more specialised risks — shielding against losses from technology failures and the invalidation of carbon credits, respectively.
Case study: How Marsh strengthened CCS project readiness for a Southeast Asian energy company
A leading Southeast Asian energy company engaged Marsh to assess the risks and insurance requirements associated with a proposed CCS project. The client faced several challenges, including uncertainty around risk allocation, evolving regulatory frameworks, climate exposure, and limited insurance market precedents for their cross-border open-source value chain.
Marsh conducted a comprehensive risk and insurability assessment, developing a detailed risk map and identifying gaps where additional mitigation strategies were needed. The study also evaluated country readiness, regulatory considerations, and overall project viability.
As a result, the client was able to:
- Gain clearer visibility of project risks and their allocation.
- Identify insurance coverage gaps and mitigation options.
- Strengthen internal stakeholder alignment.
- Improve readiness for investment and project development.
- Bolster confidence in securing long-term financing.
Why Marsh?
Marsh takes a connected, whole-of-market approach to carbon risk, helping organisations understand and quantify the risks associated with CCS projects and designing appropriate risk-transfer solutions. Our multidisciplinary team works with project owners, developers, and investors to support resilient and bankable projects. Marsh has advised various high-profile CCS projects globally and in Asia, supporting clients and governments with risk and insurability assessments, insurance program design, and ongoing risk management throughout the full value chain of carbon storage capture projects from planning to post-closure. Our modelling, advisory, actuarial, and analytical work is enhanced by bringing together experts from each of our global businesses — Marsh Risk, Guy Carpenter, Mercer, and Oliver Wyman.