Project Report:
Fossil Fuel Risk Bonds
- Investigates the causes of economic imbalances.
- Investigates the effect of the global financial system and/or the monetary system in fostering a sustainable economy.
- 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.


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. In the meantime, CSE is working working with the City in pursuing 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. Next steps: Getting the Portland City Council (and other cities) to approve a resolution pursuing this approach.

Information Dissemination

We are exploring working with a local university 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 bear the costs of these risks. 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)

1294 14th Street
West Linn, OR 97068

(503) 657-7336
(510) 384-5724
(503) 657-7336


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

Posted 3/8/2017 6:32 PM
Updated   11/9/2017 10:16 PM

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