Aon Launches New Product to Mitigate Risk in Carbon Credit Market

Aon plc (NYSE: AON), a leading global professional services firm, today announced the launch of a new specialty insurance product to cover liabilities and mitigate the risk associated with the plugging of abandoned oil and gas wells in the U.S.

Aon’s new Plug and Well Exit Liability product – developed by the firm’s Climate Risk Advisory and environmental risk solutions teams, in collaboration with U.S. environmental firm Tradewater – provides liability coverage for well-plugging operations, with the option for the associated state regulatory agency to be included as an insured.

The solution reduces financial risk in well-plugging projects and offers some security to buyers and investors in carbon credits arising from such projects. The sale of carbon credits from well-plugging helps to finance certain projects and is essential to the continuing viability of the sector and its role in mitigating climate risk. 

John Minor, national practice leader for structured credit and political risk at Aon, said: “Our new customized solution will help to drive growth and build resilience in both the carbon credit and well plugging sectors. Specialist firms such as Tradewater can now operate with comfort that many resultant liabilities will be addressed by insurance carriers.”

Data shows that the well-plugging sector has the opportunity for significant growth, with the number of abandoned wells having increased 5.4 percent between 2021 to 2022, and documented orphaned wells having increased 53 percent from the prior three-year reporting period[1].

Tim Brown, Tradewater CEO, said: “We are excited to work with Aon and develop this important new product. As Tradewater is committed to creating high integrity carbon credits with the least risk and the most impact, we approached Aon to help create an additional layer of assurance for our methane credits from orphaned gas well plugging projects, and they delivered.”

Read more about Aon’s latest perspective on successful carbon accounting here.

About Aon

Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that protect and grow their businesses.

Aon UK Limited is authorised and regulated by the Financial Conduct Authority for the provision of regulated products and services in the UK. Registered in England and Wales. Registered number: 00210725. Registered Office: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN. Tel: 020 7623 5500. [FP Number] has been approved until [FP expiry date] after which time the content should not be used or distributed.

About Tradewater

Tradewater is a mission-driven B-Corp dedicated to achieving the highest climate impact by preventing the release of the world’s most potent greenhouse gases. Through innovative projects that collect, control, and mitigate these non-CO₂ super pollutant gases, including methane, Tradewater generates high-quality carbon offset credits. Tradewater is headquartered in Chicago, Illinois, and operates globally. To date, the company has mitigated gases equivalent to more than 9 million metric tons of CO₂, delivering measurable and lasting environmental and economic benefits.