THEMATIC PILLAR 1
Overcoming Economic Dependence on Fossil Fuels
For many countries fossil-fuels (FF) dependence is a macroeconomic lock-in. Nearly 78% of global fossil fuel reserves are located in the Global South, and at least 38 developing countries are net exporters, concentrating transition exposure in economies where hydrocarbons and coal underpin exports, fiscal revenues, jobs, and balance of payments. With FF demand expected to peak before 2030, the transition away from fossil fuels presents differentiated structural risks for developing economies, no matter the pace: a delayed transition increases physical climate impacts to which many are highly exposed; a rapid transition risks sharp and potentially permanent revenue losses for exporting countries. Vulnerability, however, is not limited to exporters: net importers are exposed to supply disruptions and price shocks and constrained fiscal space to finance alternatives. These structural exposures means that fossil fuels phase-out debates must place economic dependence at the center, addressing fiscal and debt vulnerabilities, productive reconversion without creating new extractivist lock-ins, and equitable responsibilities and commitments.
1. Fiscal Dependency
For many FF dependent countries, fiscal exposure and high debt levels risk erode political support for the transition, as governments face the prospect of replacing familiar revenue streams while financing clean alternatives at a much higher cost of capital. Developing countries still receive only a small fraction of global energy transition investment (3% excluding China and G20 developing countries). Yet meeting decarbonization targets in the Global South requires an estimated USD 1.7 trillion in annual investment. Most of these resources are provided at market rates, with only about 1% delivered as grants, further adding to already high debt levels (averaging around 30% of GDP across developing countries, and reaching roughly 44% in Latin America and 47% in Sub-Saharan Africa). Given that scaling the transition requires a step change in annual investment (clean power, grids, storage, efficiency, electrification), the discussion must confront how to expand fiscal space, lower the cost of capital, and align international finance with the macroeconomic realities of indebted economies.
Fiscal dependence on fossil fuels is deeply intertwined with structural restrictions, including high public debt, limited tax revenues, and persistent inequality, which limit countries’ fiscal space and economic capacity to finance the transition. In many fossil fuel–dependent economies, revenues from extraction, exports, and related activities play a central role in servicing debt and sustaining public budgets, creating strong lock- in effects that make diversification politically and fiscally challenging. Without addressing these underlying fiscal structures and debt dynamics, efforts to transition away from fossil fuels risk exacerbating inequalities and undermining long-term economic stability. Moreover, energy price reforms, including subsidy phase-out and carbon pricing, must consider impacts on vulnerable households. Ensuring affordability and maintaining public trust are essential to sustain political support and ensure the durability of transition policies.
2. Economic and labor reconversion
The expansion of renewable energies (RE) offers real economic opportunities for FFs dependent countries, that are also rich in green generation potential and mineral resources (as it happens to be the case of FF dependent countries). However, this also poses a familiar risk: replacing FFs revenues with new extractive activities (i.e. critical minerals, hydrogen corridors, mega-infrastructure) that, along with a persisting weak governance, can replicate dispossession, environmental damage and social inequality. The UN principles on transition minerals stress that supply expansion must be coupled to operational safeguards (rights, participation, transparency, benefit- sharing, environmental limits) so that transition supply chains don’t become a new cycle of inequality and dependence. Without strong governance and safeguards, the energy transition risks reproducing the same patterns of dependency and conflict of traditional extractive industries.
A just transition requires moving beyond substituting extractive-models toward diversified, place-based economic strategies that strengthen sustainable territorialities and local value creation. Peasants and small-scale farming, bioeconomies, cooperative industrialization, and tourism rooted in natural and cultural heritage, together with local and community-based productive models, can generate employment, reinforce resilience, and enable a more equitable distribution of benefits —particularly in regions historically dependent on fossil fuel activities. Prioritizing these sectors as pillars of economic reconversion contributes to reducing fiscal and economic dependence on carbon-intensive export commodities, while anchoring the transition in inclusive and sustainable development pathways.
3. Shared responsibilities and commitments
Overcoming economic dependence on fossil fuels requires shared but differentiated responsibilities at the international level. Countries must cooperate across export– import, producer–consumer, and developed–developing divides to realign global finance, trade, and industrial policies with transition objectives. At the same time, all countries must commit to avoiding new forms of extractivism, upholding safeguards, traceability, meaningful participation, and fiscal transparency. Such coordinated commitments are necessary to stabilize macroeconomic conditions, reduce structural dependency, and ensure that the transition delivers equitable benefits, sustainable livelihoods, and territorial justice.
THEMATIC PILLAR 2
Transforming supply & demand
1. Demand
According to the International Energy Agency (IEA), global demand for coal, oil and natural gas must decline by approximately 90%, 75% and 55% respectively by 2050, with demand peaking and entering structural decline before 2030, in order to reach net- zero emissions by mid-century.
1.1 Fuel Switching
Fuel switching —the substitution of fossil fuels with zero-carbon alternatives— is the most direct and scalable way to reduce emissions and fossil fuel demand. Clean energy expansion needs to result in the direct displacement of fossil fuel use. In the power sector, this means systematically replacing coal- and gas-fired generation with renewable sources and refraining from adding new fossil capacity. Through an orderly planning, new renewable supply must reduce fossil output in absolute terms, ensuring a structural decline in fossil generation rather than parallel growth. According to the IEA, under net-zero–aligned policies, renewables would account for nearly 90% of global electricity generation by 2050 — a trajectory that depends on prompt substitution, not supplementation.
In transport, fuel switching means accelerating road electrification through standards, charging infrastructure and vehicle deployment, with electric vehicles projected to exceed 60% of global car sales by 2030 and around 90% by 2050. In industry — responsible foraround 30% of global final energy use— fuel switching requires replacing fossil-fuel boilers with electric alternatives for low and medium temperature heat and steering investment away from new fossil-based industrial assets. Across all sectors, fuel switching delivers climate benefits only when supported by solutions that actively phase out fossil fuels and prevent rebound effects.
1.2 Energy security and sovereignty
Energy security is increasingly framed around short-term fuel availability, often used to justify continued investment in gas as both a security asset and a “transition fuel.” This approach undermines energy sovereignty by deepening dependence on volatile global fuel markets and locking countries into infrastructure misaligned with climate commitments and the transformation of the energy matrix.
Ensuring energy security and sovereignty requires reducing fossil fuel dependence through efficiency, electrification, and local clean power. This shifts the focus from fuel supply to system resilience, lowering exposure to price shocks and geopolitical disruptions. It is also important that this approach considers the transformation of emerging applications, including AI, which, if applied on a fossil-heavy system, may inadvertently lock in fossil fuel dependence.
Achieving this transition demands coordinated planning, enabling policies, and substantial investment in electricity networks. The scale of the challenge is uneven: advanced economies must expand grids by at least 50%, while emerging and developing countries need over 150% more capacity by 2050. Without closing this gap, energy security will default to short-term fossil solutions instead of a resilient, sovereign, affordable, and climate-aligned energy system.
1.3 Closure of new demand drivers
Even with rapid progress in energy and transport, global fossil fuel demand would continue to rise under existing policies. The IEA shows that without additional measures, demand growth in specific sectors would offset reductions achieved elsewhere.
A key driver is the petrochemical sector, identified as the largest source of future oil demand growth globally. Petrochemicals are projected to account for over one-third of oil demand growth to 2030 and nearly half to 2050 under current trends. This makes clear that demand reduction is not only about substitution—it also requires actively closing new sources of fossil fuel demand, including looking for viable pathways to avoiding new fossil infrastructure, including petrochemical capacity,thatlocksin emissions for decades.
1.4 Energy Access
A successful energy transition mustadvance rights,sustainabledevelopmentand wellbeing, including universal access to affordable, reliable and clean energy. Today, hundreds of millions of people still lack access to modern energy services, and demand reduction strategies must be designed to close—not widen—these gaps. The IEA highlights that decentralized renewable solutions—such as solar home systems, mini-gridsand efficient electric appliances—are among theleast-cost options for expanding energy access, particularly in rural and underserved areas.
When properly designed, the transition should lower household energy costs, enable clean electrification without increasing energy poverty, and align climate mitigation with improvements in health, education and outcomes that reduce inequality and poverty.
2. Supply
Reducing fossil fuel extraction is a necessary complement to demand reduction to ensure alignment with climate goals and avoid locking in high-emissions infrastructure. Supply-side measures are essential to align investment and markets with the mitigation pathways science demands. The IPCC makes clear that limiting warming to 1.5°C requires a rapid decline in fossil fuel use this decade, while the IEA confirms that no new oil and gas fields are needed in a net-zero pathway. Without decisive supply-side action, markets will continue locking in fossil expansion incompatible with climate stability. A managed and predictable reduction of fossil fuel supply also helps align investment decisions with declining long-term demand, lowers the risk of stranded assets, and supports a smoother, fairer and orderly transition.
1.1 Planned phase down and closure of fossil fuel extraction
Existing fossil fuel reserves and extraction projects already under development are sufficient to meet projected global demand in pathways consistent with climate neutrality. Continued extraction without a managed phase-down and responsible closure increases labour, economic, fiscal, and carbon lock-in risks, as assets face declining utilization and may become stranded over time. Importantly, a responsible decline and closure in fossil fuel extraction must address environmental liabilities (restoration of extraction sites), fairly distribute responsibilities and impacts among governments, companies, and communities, ensure that closures are guided by principles of justice, cover associated costs, and manage stranded assets so that economic, labour, social, and environmental risks are mitigated.
As fossil fuel demand declines, existing and newly built infrastructure —including power plants, pipelines, LNG terminals, and industrial facilities— face increasing risks of under-utilization and early retirement. The International Energy Agency estimates that misaligned investments could generate USD 13–17 trillion in stranded assets globally, representing financial losses for investors and systemic fiscal and macroeconomic risks, particularly in countries where public finances, development strategies, or employment depend on fossil fuel infrastructure. Long-lived, capital- intensive assets such as LNG infrastructure are especially vulnerable, as declining utilization can rapidly undermine project economics, amplifying the need for careful planning, cost coverage, and equitable allocation of responsibilities.
2.2. Internalizing costs and eliminating fossil fuel incentives
Fossil fuel incentives or subsidies make fossil fuels artificially cheaper to produce an d consume, which sustains demand for fossil fuels and delays the transition. Since re newables and alternatives must compete with subsidized fossil energy, they are less l ikely to displace it without subsidy reform.
Fossil fuel subsidies can also undermine energy security by locking countries into fossil fuel dependence, discouraging investment in renewables, efficiency and alternatives, reducing incentives for energy diversification, and increasing exposure to price volatility and economic disruptions.
Phasing-out fossil fuel subsidies and strengthening carbon pricing together can help align energy prices with their environmental costs, creatingstronger incentives for energy efficiency and low-carbon technologies.2 Phasing out fossil fuel subsidies can make clean energy investments more competitive and can free up fiscal space for clean energy infrastructure and transition investments. Carbon pricing steers emission reductions towards sectors where low-carbon alternatives are already available at relatively low cost.
While there is no single recipe for successful subsidy reform, it has proven to be an important factor to steer supply and demand towards a fair, orderly and equitable transition, to create fiscal space and to reduce global emissions by 5– 10%. The Santa Marta Conference aims to build coalitions across countries facing similar constraints and to push for (i) demand-side policies focused on fuel switching, phase-out of key demand drivers and enablers for clean energy access (ii) careful and responsible phase out of existing exploration and extraction and (iii) clear pathways for the phase out of fossil fuel incentives and the scaling up of clean energy investments.
THEMATIC PILLAR 3
Advancing international cooperation and climate diplomacy
This Conference recognizes that, despite decades of negotiations and successive global commitments, the global transition away from fossil fuels is not yet advancing at the scale, speed, or level of coordination that science indicates is necessary, nor at the pace required to uphold climate justice for the most affected peoples and territories. While the multilateral process has delivered important normative frameworks and political signals, persistent implementation gaps remain, underscoring the opportunity to strengthen cooperation, accelerate practical action, and enhance collective ambition in a manner that reinforces and builds upon existing international efforts.
Fossil fuel production and investment continue to increase (IEA), highlighting a persistent gap between ambition and action, even under the commitments of the Paris Agreement to limit warming to 1.5°C (UNEP Gap Emissions Report). While the Agreement has driven some progress, current trajectories remain insufficient to meet the 1.5°C goal.
Countries also face legal and institutional constraints, including investor–state dispute settlement (ISDS) provisions, which can restrict their ability to phase down fossil fuels. The response to these challenges is not retreat, but stronger, more inclusive, and action-oriented international cooperation. Addressing this crisis with honesty and deeper democratic engagement is essential to identify where additional or complementary mechanisms are needed, strengthen implementation and governance, and remove international legal barriers that hinder the transition.
1.1. Addressing implementation, cooperation and governance gaps
Political pledges such as The Port Vila Call for a Just Transition to a Fossil Fuel Free Pacific, paragraph 28 of Decision 1/CMA.5 and the recent Belem Declaration, signal intent, but no explicit international regulation exists to phase out fossil fuel production at scale. Existing UNFCCC frameworks focus primarily on emissions, rather than on the key actions needed to implement the transition away from fossil fuels, including around production, consumption, and the broader transformation of energy systems, or on emerging drivers of fossil fuel demand. Honest reflection is needed on where the UNFCCC and related multilateral instruments have been effective, and where additional efforts, coalitions, and complementary mechanisms are required to support implementation, accelerate the transition, and strengthen global climate governance and cooperation.
1.2 Removing international legal barriers
Environmental responses do not operate in isolation; they are embedded within the broader architecture of international law. Within this system, significant legal barriers persist. Thousands of international investment agreements include investor–state dispute settlement (ISDS) provisions that allow foreign corporations to sue states for measures adopted in the public interest. In practice, this creates an inherent asymmetry: corporations can claim compensation for lost profits, while states may face costly litigation for phasing down fossil fuel operations. Such provisions risk constraining sovereign decision-making, undermining climate obligations, and reinforcing structural inequalities that privilege corporate interests over environmental protection and human rights.
1.3 Frontrunner cooperation
Enhanced collaborations through voluntary coalitions among ambitious governments, cities, private sector and civil society – such as the Climate and Clean Air Coalition, the Powering Past Coal Alliance and the International Solar Alliance - are increasingly vital for driving climate action, often outpacing formal international negotiations by allowing ambitious governments, cities, and private sector actors to collaborate on specific, fast-acting goals. By working together in new and more integrated ways, these efforts can help advance practical solutions, reinforce multilateral objectives, and contribute to building the momentum needed to address the scale and urgency of the climate challenge.
In the context of the gaps and barriers identified above, states and other actors convening in Santa Marta are invited to discuss the implications of the current state of global governance and offer their views on possible solutions that can be collectively pursued, including collaborations between vanguards, international binding legal instruments, cooperative mechanisms and soft law approaches.