- 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.
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 and 2018, CSE devoted significant staff time and resources toward taking Fossil Fuel Fisk Bonds beyond concept and into effective policy, while developing grassroots support for the Fossil Fuel Risk Bond concept. The majority of our work has taken place in Portland, where Mayor Ted Wheeler and two additional city commissioners have expressed an interest in pursuing risk bonds to shift costs of dangerous infrastructure from the public onto polluters.
Portland is home to an engaged, educated, and effective group of activists who recently won a major ballot initiative in November 2018: Led by environmental justice groups, people mobilized in support of the Portland Clean Energy Initiative, which would tax the largest corporations to help pay for a just and clean energy and energy efficiency transition in the city. (More here: https://www.portlandcleanenergyinitiative.com.) The initiative passed overwhelmingly.
Now, with this victory and Portland's ordinance banning new fossil fuel infrastructure upheld in the courts, activists are eager to organize around the next big policy idea to come out of Portland on climate and energy issues--and, because of our educational outreach, activists are coalescing around support for the Fossil Fuel Risk Bonds. With other activists and advocates of this policy option beginning to organize, we are now presenting on this concept to County Commissioners in Multnomah County, and hope to explore moving forward with Fossil Fuel Risk Bonds at the county level in early 2019. We are simultaneously exploring partnerships with local universities around the economic risk analysis of existing fossil fuel infrastructure to be done.
In addition, we are in discussion with advocates in Seattle, Houston, San Luis Obispo, the San Francisco Bay Area, and Minnesota about the application of Fossil Fuel Risk Bonds in their jurisdictions, and have submitted a proposal for joint funding to collaborate and gain alignment around this concept with project partners from around the country to a major foundation. We should hear soon whether that proposal is funded. In the aftermath of Hurricane Harvey and the devastation wrought 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 2019, 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 (WSPA) failed in their appeal with the Oregon Supreme Court, in an attempt to overturn Portland, OR's groundbreaking ordinance that the city council passed unanimously in 2016 calling for an end to all new fossil fuel infrastructure. WSPA also declined to appeal the Oregon Supreme Court decision to the US Supreme Court, meaning Portland's original decision calling for an end to all major new fossil fuel infrastructure in the city will stand. This has serious implications for other cities hoping to follow Portland's lead.
However, existing fossil fuel infrastructure in Portland remains a serious problem. 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--which is situated in an earthquake subduction zone-- 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.
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 http://sustainable-economy.org/fossil-fuel-risk-bonds-making-polluters-pay-for-the-climate-crisis/
(Check sent: 6/14/2017)
(Check sent: 10/27/2017)