Project Report:
Fossil Fuel Risk Bonds
- Investigates the causes of economic imbalances.
- Investigates causes tending to destroy or impair the free-market system.
- Explores and develops market-based solutions.


This Fossil Fuel Risk Bonds project is focused on tackling the hidden subsidies we all pay in the externalized costs of fossil fuel extraction, transport, storage and combustion. In line with the internationally recognized “polluter pays" principal, our work on fossil fuel risk bonds is an effort to get these costs borne by the polluter.

Public Citizen Billboard cropped
In the wake of Hurricane Harvey, Public Citizen underscores the need for mechanisms like fossil fuel risk bonds to internalize the costs of climate change.


For several years now, CSE has been developing and refining the Fossil Fuel Risk Bonds project. On June 1st, 2016, CSE released the report Fossil Fuel Risk Bonds: Making Polluters Pay for the Climate Crisis. In 2017, CSE devoted significant staff time and resources toward taking Fossil Fuel Fisk Bonds beyond concept and into effective policy. We are working with activists, policy advocates, and local governments to explore the practical application of the Fossil Fuel Risk Bond concept. The majority of our work has taken place in Portland, where Mayor Ted Wheeler and Commissioner Chloe Eudaly have expressed an interest in pursuing risk bonds to shift costs of dangerous infrastructure from the public onto polluters. They are also interested in exploring a fossil fuel risk trust fund capitalized by surcharges on fossil fuel-related transactions in the local economy (CSE presented to both officials’ offices in Fall 2017 and we are currently in dialogue with city staff about the details).

Portland is also home to an engaged, educated, and effective group of activists who are eager to organize for the next big policy idea on climate and energy issues. Recently, CSE has been presenting this concept to environmental groups throughout the city and helping to organize a grassroots campaign around its implementation. With other activists and advocates of this policy option beginning to organize, it is our expectation that the City of Portland will explore Fossil Fuel Risk Bonds in early 2018.

In addition, we are in discussion with advocates in Seattle, Houston, and San Luis Obispo about the application of Fossil Fuel Risk Bonds in their jurisdictions. In the aftermath of Hurricane Harvey and the devastation wrough by both climate change and the fossil fuel industry in the city, activists in the region are interested in working with us around a risk bond concept in order to ensure, when this happens again, that it is not the taxpayer that picks up the tab (see image of Public Citizen's billboard in Houston). In addition, CSE staffers Nick Caleb and Daphne Wysham attended the Pittsburgh People v. Oil and Gas conference, where they made connections with activists in Pennsylvania and West Virginia who are also interested in exploring Fossil Fuel Risk Bonds in their jurisdictions in order to challenge the expansion of the oil and gas industry by forcing polluters to internalize the costs of their activity.

In 2018, we will continue to dialogue with organizations and advocates throughout the country and support their efforts in applying Fossil Fuel Risk Bonds in their communities as resources allow.


The fossil fuel industry is exacting a growing cost on the lives of all people, and the planet overall. The costs of climate change alone is as Lord Richard Stern noted in his Stern Review of Climate Change in 2006, the "greatest and widest-ranging market failure ever seen, presenting a unique challenge for economics." This market failure means that the market for oil, gas and coal is distorted in favor of these polluting energy resources over carbon-free and low carbon energy solutions. The risks fossil fuels pose to the planet and people are only growing with their continued combustion over time. One way of preventing this market distortion from continuing is to put a price on carbon at the national level. Our project is exploring an alternative approach, which would allow local jurisdictions to impose bonds representing the full burden of fossil fuels being externalized on local jurisdictions as a cost of doing business.


The Western States Petroleum Association filed a successful appeal with the Land Use Board of Appeals, overturning Portland, OR's groundbreaking ordinance that the city council passed unanimously in 2016 calling for an end to all new fossil fuel infrastructure. The City is now appealing the LUBA decision to the court of appeals, and CSE is an intervenor in that appeal together with other nonprofit groups and government bodies. In the meantime, CSE is working with the City and grassroots advocates to pursue a fossil fuel risk bonding mechanism as one means of ensuring that the city's liability in the event of a catastrophic incident is minimized. In addition to the risk of preventable accidents, the risk of a 9.0 earthquake rocking the city and destabilizing existing fossil fuel storage tanks and infrastructure is significant. We have also met with elected officials in Washington and California who are interested in pursuing the risk bonding approach. Our priority is to focus on proof of concept in Portland first before expanding elsewhere. Next steps: Supporting efforts -- by serving as issue experts and supporting grassroots organizing -- in Portland (and other cities) to advance fossil fuel risk bonds at the local, county or state level.

Information Dissemination

We are exploring working with a university in Portland in determining the scope of the risk posed by existing fossil fuel and other hazardous infrastructure in Portland. Once that scope is determined, and funding raised for that study, we will ensure that the findings are shared with the public. It is important that neither the taxpayer nor the City bears the costs of these risks as they are now. Our "fossil fuel risk bond" mechanism is being weighed as one important vehicle for ensuring the costs are internalized.

Project Link

Amounts Approved
$27,000.00 on 6/3/2017 (Check sent: 6/14/2017)
$5,000.00 on 10/16/2017 (Check sent: 10/27/2017)

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Dr. John Talberth
President and Senior Economist, Center for Sustainable Economy

Posted 3/8/2017 6:32 PM
Updated   1/27/2018 11:45 AM

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