Global reinsurance giant Swiss Re and Climeworks, a leading specialist in carbon dioxide air capture technology, are partnering to combat climate change.
The partners signed the world’s first long-term purchase agreement for direct air capture and storage of carbon dioxide, worth $10m over 10 years, according to a statement issued by Swiss Re.
For Swiss Re, the collaboration marks a milestone towards its goal of reaching net-zero emissions in its own operations by 2030. The partnership is also a sign of Swiss Re’s support for the carbon removal industry and gives the Group early access to the new carbon removal risk pools and asset classes.
Swiss Re said, “Both the length of the term of 10 years and the total value of $10m are so far unmatched in the voluntary market for this type of high-quality carbon removal, sending an important demand signal to developers, investors, and other buyers.”
The partners also agreed to collaborate on developing risk management knowledge and risk transfer solutions and exploring future investment and project finance opportunities.
”To mitigate the risks of climate change, the world needs to scale-up carbon removal on top of, not instead of emission reductions. By partnering with Climeworks we can play to our strengths in this endeavor, as a risk-taker, investor, and forward-looking buyer of climate solutions”, said Mr. Christian Mumenthaler, Swiss Re’s Group CEO and co-chair of the World Economic Forum’s Alliance of CEO Climate Leaders.
Carbon removal solution
The technological carbon removal solution is offered by Climeworks in Iceland filters carbon dioxide (CO2) from ambient air using geothermal energy. The captured CO2 is then sent for permanent storage in nearby rock layers. It is dissolved in water and pumped deep underground, where it reacts naturally with the surrounding basalt rock to form stable carbonate minerals – the CO2 literally turns into stone.
This is considered the safest, most durable form of all carbon removal solutions that are commercially available today. At a price point of several hundred dollars per ton of CO2 removed, it is at present also one of the costliest options.
Larger, more economical air-capture and storage facilities can only be realized if customers are committed to long-term purchasing agreements, says Swiss Re.
Carbon removal projects can use nature-based solutions like afforestation, which comes with many co-benefits, such as improved biodiversity. They are, however, limited by other types of land use and are vulnerable to the rerelease of the stored carbon, eg through wildfires. This is why technological carbon removal solutions like direct air capture and storage are necessary to limit global warming over the long run.
Swiss Re said, “The insurance sector is uniquely positioned to offer support on all three fronts: through long-term purchase agreements, providing insurance capacity for evolving risk pools, and investments in new asset classes, as described in the recent Swiss Re Institute report on the insurance rationale for carbon removal solutions.”
The reinsurer has committed to achieving net-zero emissions in its insurance and investment business by 2050, and in its own operations by 2030.
Courtesy by: Asia Insurance Review