Inside the First Conference on Transitioning Away from Fossil Fuels

Governments from 60 countries are meeting in Santa Marta to advance the transition away from fossil fuels. Hosted by Colombia and the Netherlands, the conference takes place amid the global energy crisis, bringing both the urgency and complexity of transition roadmaps into the spotlight. 

Policy-makers, researchers, civil society, and practitioners will focus on how to turn global pledges into credible transition plans, navigate the fiscal and debt pressures that come with shifting energy systems, and reform the rules that still lock in fossil fuel dependence.

At this key moment for coordinated international cooperation on the transition away from fossil fuels, IISD experts are offering practical solutions on international cooperation, tax policy, public finance, just transition, and investment rules to support an orderly, equitable, and grounded transition in real-world implementation.

Need to Know: What will shape the transition away from fossil fuels 

Just Transitions and Effective Roadmaps 

As the transition away from fossil fuels shifts from commitments to implementation, credible and effective roadmaps become critical. These plans must take a holistic approach, linking fossil fuel decline with the build-out of renewables, electrification, subsidy reform, decommissioning, and economic diversification. Without this coherence, the transition risks becoming fragmented, raising fiscal exposure, increasing the risk stranded assets, and heightening energy insecurity, especially for developing and fossil fuel-dependent economies.

Governments in Santa Marta have an opportunity to send a clear signal that transition planning must be science-based, just, and internationally coordinated. They can show that credible roadmaps should protect workers and communities and involve whole-of-government ownership. 

Find out more in our guide for policy-makers working on a transition away from fossil fuels.

Fossil Fuel Subsidy Reform 

Fossil fuel subsidies are the biggest form of public financial support for fossil fuels, amounting to more than USD 921 billion in 2024. These subsidies place enormous pressure on public budgets.  

Blanket subsidies are highly inefficient, often providing disproportionate benefits to high-income households while weakening incentives to reduce fossil fuel use. During the current price spikes, governments should consider alternative support policies to retain incentives to build national energy mixes less dependent on volatile fossil fuel markets. Direct support for households and industry facing high energy costs is both more effective and financially sustainable.  

In Santa Marta, government commitments to reforming fossil fuel subsidies and other incentives can signal national intentions to the energy sector transition in a way that strengthens energy security through diverse, affordable, and localized energy mixes. Well-designed reform can provide improved support for those who need it most while freeing up public finances. Initiatives like COFFIS, the coalition of countries committed to subsidy reform, offer a platform for peer learning and technical expertise. . 

International Financial Architecture and Debt Sustainability 

The transition away from fossil fuels raises major challenges for public finances and debt sustainability. Because much of the transition depends on public goods—such as clean infrastructure and resilience—countries will need to take on more public debt, even where debt levels are already high.  

This creates a difficult trade-off: without investing in the transition, future growth and countries’ ability to repay will be at risk, leaving both governments and investors at a crossroads. Addressing this requires more flexible fiscal frameworks that allow countries to invest today while maintaining credible long-term stability.  

At the same time, the transition can strain external balances, particularly for fossil fuel exporters facing lower revenues and higher import needs. This may increase external debt and financial pressures, highlighting the importance of linking debt relief to resilience and climate goals. Coordinated action by multilateral and bilateral creditors will be essential to support a stable and sustainable transition. While many of these initiatives have been primarily shaped within forums such as the G7 and G20, the Santa Marta conference is expected to deliver a strong political statement—one that places pressure on developed country authorities and draws attention to the challenges that debt burdens pose for transitioning away from fossil fuels. 

Investor–State Dispute Settlements 

Investor–state dispute settlements (ISDS) embedded in hundreds of trade and investment treaties remain a significant obstacle to achieving the Paris Agreement goals. This mechanism allows fossil fuel companies to sue host states before international arbitral tribunals for introducing phase-out and other climate policies. Moving away from ISDS by first excluding fossil fuel investments from its scope and then terminating or withdrawing from agreements that include such provisions is critical to safeguard governments’ climate policy space.

President Gustavo Petro’s recent pledge that Colombia will exit the ISDS system sends a strong signal. Now, other countries represented in Santa Marta, including those from the Global North, need to build on this momentum by pursuing concrete, coordinated measures that restrict the use of ISDS against climate action.

State-Owned Enterprises 

State-owned enterprises (SOEs) are central to the Santa Marta discussion because they control most of the world’s oil, gas, and electricity supply and are one of the main ways many governments shape energy systems. Across the G20, energy SOEs still invest close to USD 300 billion a year in fossil fuel infrastructure, with most of that coming from national oil companies. At the same time, on the positive side, some SOEs (especially state power companies) are increasingly investing in renewable energy and grids. Since governments own and oversee these companies, their investment choices should directly reflect public priorities on energy security, development, and transition. Energy SOEs need to become technology-neutral providers of energy security, rather than companies devoted solely to coal, gas, or oil.  

The conference in Santa Marta gives governments an opportunity to send a clear signal that SOEs should align public investment with a more secure and resilient energy future. That means a shift away from new fossil fuel expansion toward renewables, grids, and other transition-enabling infrastructure, alongside stronger oversight of SOE spending and greater transparency on where public money is going. 

Carbon Pricing and Energy Taxes 

Carbon prices and taxes can accelerate the shift away from fossil fuels. Such measures are most effective when embedded in a broader policy mix of taxes, standards, and investment and coordinated across ministries so that climate, revenue, and energy security goals pull in the same direction.

Green tax incentives, under the right conditions, can help redirect private capital into clean energy projects by reducing upfront costs and lowering financial risk, thereby accelerating the deployment of low-carbon solutions at scale. Our recent report looking at 35 emerging and developing economies shows that design is key for success and that incentives that are transparent, time-bound, and aligned with broader energy and fiscal policies are most effective. 

Amid the oil price crisis, the Santa Marta conference will discuss how governments can navigate volatile prices while planning smart carbon pricing and tax policies in the long term to gradually steer private finance away from fossil fuels toward clean energy and reduce their exposure to future fossil fuel supply shocks.