AFTINET | 4 May 2026

Fossil fuel phase-out conference: governments cite ISDS as a barrier to just transition

Australia and 56 other governments, representing around one third of global GDP, met last week in Santa Marta, Colombia, and agreed to map out practical ways to phase out fossil fuels at the first global diplomatic forum to assess practical steps to do so. This informal “coalition of the willing” was initiated at the 2025 UNFCCC COP 30 conference to implement the just transition away from fossil fuels needed to achieve net zero after governments from some fossil fuel producing countries blocked the inclusion of fossil fuel phaseout in the official COP 30 statement, which required agreement by all. The Santa Marta conference governments will proceed with these steps while continuing to advocate for fossil fuel phaseout in the official processes towards the COP 31 meeting in Antalya, Türkiye, in November 2026.

The conference discussed practical steps to achieve a just transition including overcoming fiscal dependence and debt of Global South countries, the need for specific pledges of climate finance from Northern countries, transforming supply and demand away from fossil fuels, and changes to international institutions, including identifying legal barriers to just transition.

This last theme identified investor rights to sue governments in many trade and investment agreements, known as Investor-State Dispute Settlement (ISDS) as a barrier to fossil fuel phaseout. ISDS rules enable international companies to sue governments for billions in compensation if a change in law or policy reduces their future profits. In the leadup to the conference 346 civil society organisations from 50 countries, and 220 economists urged governments to withdraw from ISDS arrangements. Civil society groups from Indonesia stated that ISDS “not only obstructs early coal retirement but also threatens sovereignty over critical minerals” and Colombia announced it will withdraw from ISDS arrangements.

ISDS featured strongly at pre-conference gatherings by academics, in a statement by civil society, and in the discussion between governments. The summary statement of takeaways released by co-host nations Colombia and the Netherlands notes that the conference discussed “decarbonisation of trade balances, advancing progress toward a fossil-fuel–free trade system” and “reviewing and improving international investment agreements, alignment of trade rules, as well as clarification of the legitimacy of transition policies within the investment regime” including those such as ISDS that were “perceived as creating barriers.”

This is an ongoing process. Tuvalu and Ireland were announced as the co-hosts of the second transitioning away from fossil fuels summit, which will take place in Tuvalu in 2027 to assess progress.