Insurers will remain quarantined from emerging energy markets until governments worldwide lay down market blueprints to support low-emissions technologies, global reinsurer Swiss Re says.

Swiss Re’s Emerging Risk Management Division head, Ivo Menzinger, says insurers are unable to offset the risk of many promising technologies such as underground carbon capture because no legislative frameworks are in place.

Without clear definitions and parameters from governments, insurers can’t accurately calculate the risk involved.

“For example, there is no insurance cover for carbon capture storage,” he said. “There is only a handful of pilot programs. This is still to be resolved on a global level.”

Mr Menzinger, in Australia for the launch of the Australian Business and Climate Group (ABCG) report into low-emissions technology, says markets require the right institutional framework and financial incentives for the field to flourish.

The ABCG is calling on the Federal Government to develop a national low-emissions technology strategy to complement a national emissions trading scheme.

“More than 86% of global investment is private,” Mr Menzinger said. “It’s not sufficient to set targets and say the technology will be the solution. It’s very easy to commit to targets, but it’s much harder to implement them.”

He says carbon capture is an important tool for limiting greenhouse gas emissions in the coal sector, an industry saddled with an anti-environment image.

Last month, the Environment Protection Authority approved the world’s largest trial of carbon dioxide capture for south-west Victoria, where up to 100,000 tonnes of carbon dioxide will be pumped into a geological formation in the Otway Basin.

Mr Menzinger says the technology is extremely important in curbing gas emissions. “But at some point in time we need to articulate the liability issues.”

He says insurers are responding to customer demand by working environmentally friendly initiatives into policies.

“If you look at the carbon markets where carbon certificates are being produced, sold and traded, the insurance industry can act as a facilitator for that development.”