By Ross McKenzie, EVP and Co-Leader at Elimini
The toll of climate change is growing. With every wildfire, storm, and flood, communities face devastating losses, and the ripple effects increasingly strain economies. For insurers, this reality poses a unique challenge: unlike many industries, they’re on the front lines, absorbing the costs of damage in real time while their traditional models for pricing and managing risk are strained. In fact, insured losses in the first half of 2025 exceeded $100 billion, the second highest amount ever and more than double the 21st century average of $41 billion.
With volatility accelerating, insurers are forced to rethink not just underwriting practices and capital planning, but also how they can contribute to strategies for long-term resilience.
CDRs Enter the Risk Equation
One emerging tool in this reassessment is carbon dioxide removals (CDRs), which are evolving beyond emissions offsets into a material consideration for insurers’ risk and capital strategies.
The shift is significant – these credits don’t just support net-zero goals, they also create risk pools and asset classes that insurers must evaluate with the same rigor they apply to other financial instruments. That evaluation requires attention to four critical factors:
- Permanence of carbon storage.
- Counterparty credit quality.
- Disclosure requirements under evolving regulatory frameworks.
- Liability management if projects underperform or fail.
When evaluated rigorously, these investments can strengthen balance sheets rather than introduce new vulnerabilities. That’s why early engagement matters. Insurers who move first can secure quality credits at lower cost, influence how removals are evaluated for climate integrity and financial risk, and align more closely with regulators and clients embedding removals into their decarbonization pathways. Those who wait may risk higher costs, limited access to supply, and competitive disadvantages as peers and customers move faster to integrate removals into long-term strategies.
BECCS – Removal with Resilience
Out of the spectrum of CDR solutions currently available, bioenergy with carbon capture and storage (BECCS) offers distinct advantages for insurers. BECCS not only permanently removes carbon from the atmosphere, but it simultaneously generates firm, renewable energy — addressing soaring demand for responsible, reliable power.
Beyond its environmental and energy benefits, BECCS can reduce delivery risk by creating multiple revenue streams – from price premiums on durable removals to energy sales and tax incentives. These revenues shorten the payback period and strengthen cash flow, improving project resilience and making BECCS more attractive to insurers and investors as a high-integrity CDR at a more appealing price point.
The technology uses sustainably sourced low-grade wood and forestry residues, creating a circular economy benefit while reducing wildfire “ladder fuels” that drive catastrophic losses. For insurers, this wildfire connection is critical. Fire risk remains one of the largest contributors to escalating insured losses, and by helping to manage forest debris, BECCS can lower the frequency and severity of fires, directly reducing claims exposure.
Further, captured CO₂ is permanently stored in geological formations – a process backed by over 25 years of safe demonstration.
Momentum Toward Mainstream Adoption
The carbon removal market is rapidly scaling, with BECCS leading transaction volume for engineered removals – up 84 percent year over year in 2024. The momentum hasn’t slowed; as of Q2 2025, BECCS accounted for 74 percent of all-time engineered CDRs transacted in the voluntary carbon market.
There is also evidence that the industry is moving toward mainstream adoption with an increasing number of partnerships and policy signals. These include the 45Q carbon removal tax credit in the U.S., expanding regulatory backing to include carbon removal credits within the EU Emissions Trading System, and the rise of BECCS CDR offtake agreements. For instance, Elimini recently signed an agreement with Greater Copenhagen’s public utility, HOFOR, to advance a large-scale BECCS facility at the Amagerværket combined heat and power plant in Denmark.
These developments demonstrate that BECCS is no longer experimental — it’s entering commercial reality. For insurers, this momentum creates a timely opportunity to engage early, help shape standards, and position themselves competitively as CDRs move from niche to mainstream.
Insuring the Next Era of Decarbonization
Insurers not only bear the costs of climate volatility – they’re uniquely positioned to finance and advance the solutions that reduce it.
By integrating high-quality CDRs, such as BECCS, into portfolios, insurers can strengthen balance sheets, mitigate liability, and stay ahead of evolving disclosure and regulatory requirements. Partnerships with providers, like Elimini, make this possible, offering trusted credits that allow insurers to build diversified, credible portfolios without compromising standards.
Looking ahead, insurers who lead in this space will not only safeguard their own capital but also help mature the CDR market, accelerate clean energy deployment, and ensure the systems that underpin a net-negative global economy. In doing so, they will move from absorbing climate risk to actively underwriting resilience.
To learn how Elimini’s focus on high-integrity carbon removals can help future-proof portfolios and scale climate impact, visit elimini.com/insurance.
10/29/25