Purpose
- Investigates the causes of economic imbalances.
- Investigates causes tending to destroy or impair the free-market system.
- Explores and develops market-based solutions.
Summary
CSE’s Fossil Fuel Risk Bond program is having an impact on the ground. As a result of successful research and advocacy in the Pacific Northwest, we now have policy templates that can be used at the state and county level in every US county that has a significant concentration of fossil fuel infrastructure. In addition, the work has been publicized by Brookings Institution, which will greatly enhance our ability to spread the model. In 2025 and 2026, we seek support for a joint campaign with Physicians for Social Responsibility to achieve three overriding outcomes: (1) ensuring that FFRB programs in Oregon and Washington are implemented in the strongest possible fashion; (2) having a model national FFRB program proposed and introduced in the 119th Congress, and; (3) persuading several jurisdictions to consider FFRB programs as a way to finance climate adaptation, as demonstrated in our new report with researchers at the University of Oregon and Reed College.
Description
Project update December 2025
CSE and is partners are successfully advancing Fossil Fuel Risk Bond programs in the Pacific Northwest. Together with This Land and Risky. Business – two NGO partners in Oregon and Washington – we are working to strengthen existing program elements enacted in Washington and enact bold new requirements in Oregon on both a statewide level and in Multnomah County’s Critical Energy Infrastructure (CEI) Hub, where the vast majority of the state’s liquid fuels are stored. Activities thus far in 2025 include:
Washington State – strengthening financial assurance requirements
In 2022, and with generous support from the Alex C. Walker Foundation, CSE and its partners worked with legislators to enact Washington’s first Fossil Fuel Risk Bond bill (HR 1691), which established financial assurance (FA) requirements to shield taxpayers from the cleanup and damage costs associated with oil spills and accidents involving vessels and onshore refineries. Rules subsequently adopted by Washington Department of Ecology (“Ecology”) capped overall liability at $300 million per facility and utilized a per-barrel clean-up cost of $12,500 as a basis for the financial assurance requirements. CSE is now leading efforts to update those figures as they no longer represent the maximum damages taxpayers may incur as a result of major accidents or spills.
The $300 million cap was based on an erroneous interpretation of HB 1691 and was adopted because Ecology assumed – after hearing from the oil industry alone – that this was the maximum amount of insurance coverage that could be obtained in the open market. However, HB 1691 did not limit FA requirements to insurance. It also included surety and performance bonds, letters, of credit, and third-party trust accounts, all of which can be used to add to insurance coverage and bring FA more in line with the actual level of taxpayer risk. We are asking Ecology to revise its rules to eliminate the cap and recognize that FA instruments need to be combined (or stacked) to effectively eliminate taxpayer risk.
Another shortcoming of Ecology’s FA rules is the assumed worst-case damages of $12,500 per barrel of oil spilled. This is a very outdated figure and far below what the agency is using in its tug escort requirements for small to medium sized oil carrying tank vessels under a separate law – the Oil Transportation Safety Act. Those rules are using a value of $36,403 per barrel as an estimate of cleanup costs and $12,578 for environmental damages. In 2026, we will be petitioning Ecology to harmonize the figures used under these separate laws and to eliminate the $300 million cap.
Multnomah County, OR- FFRB phase III ordinance
Multnomah County houses the largest concentration of liquid fuels facilities in the state, and they all sit on top of an unstable geological foundation that will liquify in the event of a 9.0 Cascadia Subduction Zone earthquake, releasing what has been modeled to be the largest oil spill in US history at a cost that could exceed $2.6 billion in damages. In late 2024, and under the leadership of now departed Commissioner Sharon Mieran, a comprehensive (phase III) FFRB ordinance was drafted and made ready to move before the full Commission. (Phases I and II were initiating the process of getting the ordinance drafted and completing an economic risk assessment that serves as the basis for FA requirements).
CSE worked hard to remedy some of the most significant shortcomings of the ordinance such as a cap that mirrored the Washington rules ($300 million), an unreasonably low FA price per gallon, and the omission of decommissioning costs from FA requirements. Two current Commissioners are now jockeying for position to lead the ordinance over the finish line, and CSE, This Land, and Risky Business are working hard to ensure that whatever approach is settled upon reflects all of the issues and concerns we flagged for the Commission in our extensive comments and recommended amendments to the November 2024 draft.
Oregon: statewide FFRB legislation and potential rule-making petition
During the 2025 legislative assembly Oregon’s first statewide Fossil Fuel Risk Bond legislation was introduced, passed out of committee, and was then referred to Ways and Means, which needs to approve the bill for a full floor vote. The bill HR 2949-5 (with -5 signifying the fifth and final set of amendments) was an important first step towards expanding the scope of the FFRB approach beyond the CEI Hub to include another concentrated bulk liquid fuels storage facility in Lane County. However, the bill had many shortcomings. CSE and This Land co-authored an extensive critique and proposed amendments, many of which are now being considered in a new legislative initiative planned for 2026. Two key issues we flagged were the bill’s preemption language, barring counties or cities from enacting anything stronger than the statewide bill and an extended rulemaking process that would leave taxpayers vulnerable through 2030.
The political landscape here is getting complicated, with at least three separate bills now being drafted, two in the House and one in the Senate. While CSE, This Land and its partners appreciate all the interest and enthusiasm, it is becoming a difficult task to stay at the table with each of these and ensure that the approach is not weakened by the oil industry’s relentless pressures. There is also a bit of competition at work among legislators, and there is a risk of all three bills moving without a coherent strategy to get a single bill enacted.
We will continue to watchdog this process closely, but in the meantime, we are working on a Plan B that would involve CSE and its partners filing a rule-making petition with the Environmental Quality Commission (EQC) that would get us all of what we want in the FFRB legislation now being considered and more – i.e. FA for decommissioning and no cap on liability. Our opinion is that EQC does not need any additional legislative authority to move forward on FFRB rules and so having this rule making process in play is a good backup strategy in case the three competing legislative proposals we expect in the 2026 legislature get bogged down.
Purpose
In 2016 Center for Sustainable Economy proposed a commonsense solution for addressing the market failures associated with fossil fuel infrastructure – fossil fuel risk bond (FFRB) programs. Climate change is one, a market failure of breathtaking proportions. Add to that the market failures associated with fossil fuel infrastructure itself – the vast network of coal mines, oil and gas wells, pipelines, refineries, oil trains, LNG trains and fossil fuel export terminals that cause expensive physical damages to land, air, water and frontline communities. Air pollution and climate change caused by fossil fuels generate externalized damages of $2.2 – $5.9 trillion per year in the US, and by 2100, the Network for Greening The Financial System predicts a hit in the order of 3 – 10% of GDP each year. Fossil fuel risk bond programs are tools that regulators can use to begin to address these staggering externalized costs.
Scope
The geographic focus of our work in 2025 and 2026 will be in Oregon, Washington, Illinois, California and potentially Louisiana. We also plan to work with Physicians for Social Responsibility on a federal FFRB strategy before the 119th Congress.
Information Dissemination
Results and findings from our work will be disseminated widely on various climate and clean energy listservs, in earned media, in opinion pieces, and through in-person meetings with key decision makers.
Project Link https://www.brookings.edu/articles/fossil-fuel-risk-bond-programs-a-policy-innovation-makes-headway-in-the-pacific-northwest/
Amount Approved$30,000.00
on 5/31/2025
(Check sent: 6/6/2025)
