The Net-Zero Insurance Alliance (NZIA) is a commendable initiative that shows the insurance industry’s commitment to support the transition to a low-carbon economy. However, I also understand the challenges and uncertainties that the NZIA members face in aligning their underwriting portfolios with the net-zero emissions goal by 2050. The article mentions some of the reasons for the member exodus, such as the lack of clarity on the definition and measurement of net-zero underwriting, the difficulty in obtaining reliable data on the carbon footprint of the insured activities, and the potential conflict of interest with the clients and the regulators. I hope that the NZIA can overcome these hurdles and find a way to reconcile the different views and expectations of its members and stakeholders. I also hope that the NZIA can collaborate with other net-zero alliances in the financial sector, such as the Net-Zero Asset Owner Alliance and the Net-Zero Banking Alliance, to create a consistent and coherent framework for the net-zero transition. One of the areas that I think the NZIA should focus on is the innovation and development of new insurance products and solutions for the emerging green technologies and sectors, such as green hydrogen, which is mentioned in the article. Green hydrogen is expected to play a key role in decarbonising the hard-to-abate industries, such as steel, cement, and chemicals, as well as in providing clean energy storage and transportation. However, green hydrogen projects face many technical, regulatory, and financial risks, which may deter investors and lenders from supporting them.
The insurance industry can help to mitigate these risks and facilitate the growth of the green hydrogen market, by providing adequate and affordable coverage for the construction and operation of green hydrogen facilities, as well as for the transportation and storage of green hydrogen. I also hope that the NZIA will incorporate green hydrogen as one of the priority areas in its net-zero underwriting strategy, and work with the relevant stakeholders, such as the International Renewable Energy Agency (IRENA), the Hydrogen Europe, and the European Clean Hydrogen Alliance, to develop the standards and guidelines for the assessment and disclosure of the environmental and social impacts of green hydrogen projects. In conclusion, I think the NZIA is a valuable and necessary initiative that can make a significant contribution to the global fight against climate change. I urge the NZIA members to stay committed and engaged, and to work together to overcome the challenges and seize the opportunities that the net-zero transition presents. I also urge the NZIA to foster innovation and collaboration in the insurance industry, and to support the development and deployment of green technologies and sectors, such as green hydrogen, that can accelerate the decarbonisation of the economy and the society. The insurance industry has a pivotal role!
26/01/2024
Source: https://www.ft.com/content/07cf8294-7be8-427e-a60e-fa672852e38b