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. New legislation in Oregon establishes a financial assurance requirement for large fuel terminals to guard taxpayers against the costs and risks of explosions, spills, and accidents. In Washington, new rulemaking provides an opportunity to strengthen FFRB laws we helped get on the books in 2022. In several states, climate superfund legislation is providing a forum for CSE to propose an alternative approach based on the adaptation surcharge mechanism we researched in our Brookings.edu report and the report we published in Oregon with the Forum on Oregon Climate Change Economics (FORCE). This grant cycle, we seek to achieve three key outcomes: (1) Oregon’s new fossil fuel risk bond bill is implemented in the strongest possible fashion; (2) fossil fuel risk bond rules are updated in Washington to cover all taxpayer costs, and (3) several jurisdictions consider FFRB surcharges to finance climate adaptation.
Description
Project update 9-24-26:
The focus of this year’s fossil fuel risk bonding work is to build on last year’s successful efforts to help pass and implement Oregon’s new fossil fuel risk bond policy now in place in the form of HB 4100 (2026). Specifically, we are working with partners and legislative allies to address the components of fossil fuel risk bond programs left for future legislative sessions. These include bonding to cover the cost of facility decommissioning and the surcharge-based approach described in 2025 report issued with researchers at the University of Oregon and Reed College under the auspices of the Forum on Oregon Climate Change Economics (FORCE). We also are participating in the rule making processes in Washington State to update financial assurance requirements for onshore refineries and oil vessels enacted as a result of our fossil fuel risk bond work there in 2021. Accomplishments thus far include:
1. Oregon Raindrop Fund joins as a partner
The Oregon Raindrop fund awarded CSE and This Land $50,000 toward this project over the next year. As a 501c4, This Land has the option of using part of these funds for legislative advocacy, which CSE has elected not to do at all under our 501c3 status. Remaining funds are being allocated to CSE to fund research and development of the two policies discussed above.
2. Monitoring HB 4100 implementation
In early July 2026, Dr. John Talberth was appointed to the Department of Environmental Quality’s Technical Review Committee on HB 4100 implementation. He has participated in two video calls thus far to provide expertise in support of DEQ’s rulemaking process, which is now fully underway. Dr. Talberth will continue to monitor developments over the next several and provide detailed comments on the draft rules when they are made available for public comment.
3. Bonding for decommissioning of fossil fuel facilities
In the discussions over HB 4100 last session the decommissioning bonds issue loomed quite large but at the end of the day was set aside as one to address in future sessions. We intend to follow through this year. Our approach will piggyback on existing financial assurance rules that are applicable to all large energy facilities in the state. But the existing rules are very weak, just requiring some indirect checks to ensure that the owners are large and stable enough to financially compensate for the costs of disasters or decommissioning. This makes it easy to propose new rules and/or legislative fixes that will give the financial assurance rules some teeth by requiring bonding as per our risk bond approach.
4. Financing climate adaptation through a surcharge-based mechanism
The surcharge-based approach we have proposed would apply to all wholesale transactions of industrial timber, fossil fuels, and concentrated animal feedlot operations and be based on emissions factors published by EPA or the academic literature. As indicated in our report with FORCE, we believe a surcharge of about $5 per metric ton CO2 is all that would be needed to cover the expected costs of climate adaptation through 2050 if collections begin now and if the funds are put into a trust fund that can accumulate interest. We have drafted a legislative concept note to implement the program in Oregon beginning in January of 2028 and will be working to garner support and then convert this into draft legislation for the 2027 session.
One recent development giving momentum for this approach is that two federal courts have now invalidated so called ‘climate superfund’ bills passed in various states, bills that would have required global fossil fuel corporations to put up hundreds of billions to fund climate adaptation work. As we pointed out to legislators in Oregon, however, the bill seems unconstitutional to us because it is discriminatory (it attributes the entire cost of climate change to just one class of polluter) and runs into preemption issues with several federal statutes. Justices in both cases have agreed. This now makes our proposed alternative far more politically feasible.
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 will be in Oregon and Washington, where we will be building on the Fossil Fuel Risk Bond legislation already passed by participating in the detailed rule making processes associated with those bills. We also intend to work in other states that are contemplating "climate superfund" legislation to offer an alternative based on the FFRB surcharge approach we developed to help pay for climate adaptation. These include California, Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, Oregon, Rhode Island, Tennessee, and Virginia.
Information Dissemination
CSE is disseminating information on the results and findings of our work on a continual basis to partners, legislators, and other allies via webinars, regular partner calls, and one-on-one meetings. We also update our website to reflect any major new developments, and utilize various email lists to help generate interest and support for our proposed policy mechanisms.
Project Link https://www.sustainable-economy.org/oregon-fossil-fuel-risk-bond-bill-signed-into-law
Amount Approved$30,000.00
on 5/20/2026
(Check sent: 6/1/2026)
