The world’s largest property and casualty insurer, Chubb, announced on Wednesday that it will only insure oil and gas projects that have meaningfully taken measures to reduce methane emissions.
Methane is the second-most prevalent hydrocarbon, after carbon dioxide, and one of the most damaging greenhouse gases.
Chubb’s CEO Evan G Greenberg said in a statement: “The methane-related underwriting criteria that Chubb has adopted – the first of their kind in our industry – are focused on the balance between the need to transition to a low-carbon economy and society’s need for energy security”.
The insurer also announced that it would not be providing coverage for oil and gas projects in government-protected conservation areas, according to the World Database on Protected Areas.
Greenberg added: “Our policy on not insuring energy projects in protected areas also reflects our approach to setting clear guidelines to sustain biodiversity and protect nature”.
Clients must present “evidence-based plans” to cut methane emissions at their projects for them to be considered for Chubb coverage. While the new criteria is effective immediately, Chubb said that certain existing customers will have time to develop “an action plan based on their individual risk characteristics”.
At a minimum customers must develop a programme to detect leak and remove non-emergency venting, they must also reduce emissions from flaring, where the gas is burned deliberately to dispose of it.
According to Greenberg these new measures are an important way of engaging in environmental measures without “committing to sweeping net-zero pledges for which […] there is not a viable path to achieve”.
Chubb hopes that the measures will encourage those in the wider oil and gas industry to reduce greenhouse gas emissions in extraction.
Methane is a common by-product of the oil and gas industry released through leaks, deliberate releases, or flaring.
According to the International Energy Agency, methane is responsible for 30% of the rise in global temperatures since the industrial revolution.
Chubb’s announcement comes in the same week that the Biden administration is clamping down on methane emissions in the US.