Fixed costs in onshore energy policy refer to non-fuel, non-variable expenses incurred during various phases of an onshore energy project, including construction, operation and maintenance. These costs can significantly increase exposure for carriers in the event of a loss. The committee continues to work with experts and practitioners to investigate potential mitigation strategies.

This provision addresses various issues, including ingress/egress, demolition and increase cost of construction (DICC) and the mandates imposed by civil authorities that influence reinstatement standards and regulations across different jurisdictions. Despite being longstanding, these issues can significantly affect carriers, potentially leading to unintended coverage exposures.

Currently, there are three main trading schemes in operation: the EU trading scheme, US trading scheme and UK trading scheme. For instance, under the EU trading scheme, businesses with a high risk of carbon leakage receive free allowances, which are reduced over time. These allowances can impact an insured’s profitability and, in the event of a loss, increase exposure for carriers. The committee is actively seeking solutions that benefit both insurers and insured entities.