Last Saturday, thousands of Manitobans participated in a much-loved and storied tradition—the opening of the Lake Winnipeg fishing season.

Throughout the season, boats will be loaded up; tackle will be checked, double checked, forgotten on the dock, and then duly retrieved; and sunscreen will be optimistically slapped on as anglers set out across the planet’s 11th largest freshwater lake on the hunt for walleye, sauger, and much more.

In true urbanite style, however, I will be firmly fixed to my trusty office chair, clacking away at my keyboard.

As a communicator who has worked in freshwater science in Manitoba for over a decade, it’s not that I am averse to the charms of the province’s over 100,000 lakes. It’s just that from behind my laptop, I’ve come to believe that there is a critical missing link in our conservation efforts: the power of a well-told story. On dry land.

For many years, Lake Winnipeg has lived in the public imagination as Canada’s aquatic sick child—a lost cause known principally for its annual blight of algal blooms or the zebra mussels that clutter up its shores and headlines. That is a narrative.

And while the threats to the lake are certainly very real and serious, what’s often missing from the conversation is a public understanding of the groundbreaking science taking place in our backyard to understand and mitigate the very ailments from which Lake Winnipeg suffers.

We often view science as a collection of spreadsheets and jargon-heavy reports—and it certainly presents its fair share of those treasures—but science should always be focused on changing the way humans legislate and act toward the environment. And that starts with public awareness.

We’ve seen the global power of this approach before. When the BBC’s Blue Planet II first aired images of turtles entangled in discarded six-pack rings, it sparked a Blue Planet effect that shifted national policy on single-use plastics almost overnight.

The proof was in the (sticky toffee) pudding. By translating complex marine biology into an emotive story of public shared responsibility, this one episode of television had more impact than decades of white papers ever could.

Closer to home, initiatives such as the Lake Winnipeg Foundation’s community-based monitoring program have turned citizen science into a powerful narrative tool, allowing Manitobans to see exactly how their local phosphorus contributions impact the greater whole.

When researchers at the University of Winnipeg set out to identify the lake’s viruses, it wasn’t just to build data sets; it was to build a roadmap for how we can reduce algal blooms and thus boost local fisheries, tourism, and water security.

The problem isn’t that we lack the research. It’s that we haven’t always prioritized the translation of that research into stories that resonate within the city’s perimeter.

Next week, Winnipeg will become the global epicentre of this conversation. Hundreds of leading aquatic scientists from Canada, the United States, and East Africa are descending on our city because they recognize that Lake Winnipeg is a global case study for connected waters.

This conference isn’t just an exercise in wearing untold shades of plaid; it’s a rare opportunity for our local challenges to be viewed through a global lens, inviting fresh perspectives on how to manage the waters that sustain us.

It’s only with accessible communication of robust, local science that we can improve the health of Lake Winnipeg. If we want the next generation of anglers to experience the thrill of the first cast, we must invest in the bridge between the laboratory and the living room.

When we tell the story of Lake Winnipeg better, Manitobans don't just see that proverbial, provincial sick child. They appreciate a resilient, living system and understand what exactly is needed to improve its health.

That is how we secure water security for this generation, and for many to come.

Three Pillars to Accelerate the Transition

The inaugural international conference on transitioning away from fossil fuels was remarkable for its explicit focus on the fossil fuel transition. Participants committed to meeting again to expand this "frontrunner coalition” to include not only more countries, but also a broader spectrum of diverse economic and social actors. To maintain this momentum, it was announced that the cooperation will continue at a second conference, to be held in Tuvalu with Ireland as co-chair.  

The chairs announced a framework for the upcoming conferences, which centred on three strategic workstreams: developing comprehensive national and regional roadmaps; aligning cross-border trade policies; and addressing financial architecture, including fiscal, subsidy, and debt traps that impede transition. This final pillar will be officially supported by IISD.

"The true success of this conference lies not just in the honest conversations that were held, but in the enduring community that has emerged from this coalition of the willing. As the Dutch Minister so aptly noted, if COP 28 laid the first layer for transitioning away from fossil fuels, Santa Marta has provided the second essential foundation: trust. We have moved beyond mere rhetoric to a commitment of continuous, collective action."

Patricia Fuller, CEO and president, IISD

Energy Security and Price Shocks Strengthened the Case for Transition

The conference was held at a time when soaring global fossil fuel prices were putting pressure on people and governments to address affordability. Against this backdrop, participants repeatedly framed energy security as one of the key reasons to accelerate the transition away from fossil fuels.

Governments linked dependence on fossil fuels to exposure to price shocks, fiscal pressure, and geopolitical risk. In that context, transitioning away from fossil fuels was often presented as a strategy for more reliable, affordable, and resilient energy systems. Colombia’s closing message reinforced this point, describing the conference as a moment to confront difficult questions directly, lift long-standing taboos, and change the speed of global action.

From National Pathways to Practical Global Cooperation

A bottom-up approach was central to the spirit of Santa Marta. Countries came together because they recognize the need to implement the transition, even if they may not yet agree on timelines, sequencing, and allocation of responsibilities. A key question was how nationally driven transition pathways can add up to the level of ambition needed globally within a rapidly shrinking carbon budget.

It was clear in Santa Marta that many countries are already moving ahead with transition roadmaps and intend to make those pathways a pillar of future cooperation. The priority now is to ensure these bottom-up efforts deliver at the pace the global transition requires. The workstream on roadmaps between now and the second conference should work to connect countries with relevant science and expertise, and support them in producing ambitious roadmaps.

“Countries already agree there is a need for this transition and that they cannot do it alone; they need to coordinate internationally,” said Paola Yanguas, a policy advisor at IISD who co-facilitated the academic conference workstream on transition roadmaps. “Santa Marta offered a space to begin exploring practical forms of coordination, from partnerships between producer and consumer countries to plurilateral cooperation on finance and other transition challenges.”

Fossil Fuel Subsidies in the Spotlight

During the high-level discussions, governments underscored that reducing dependence on fossil fuels means tackling the policies that continue to lock that dependence in. Fossil fuel subsidy reform was discussed as a tool to increase energy security, free public resources, and help shift incentives toward cleaner energy systems. A recurring theme was that short-term responses to energy price pressures should protect people without reinforcing long-term fossil fuel dependence. The conference also promoted the Coalition on Phasing Out Fossil Fuel Incentives Including Subsidies (COFFIS) as a platform to support national ambition. The Dutch Minister of Climate Policy and Green Growth, Stientje van Veldhoven, invited more countries to join the coalition, while the Marshall Islands announced its new role as co-chair, strengthening the role of climate-vulnerable countries in pushing subsidy reform from commitment to implementation.

Tina Stege, climate envoy for the Marshall Islands, called on all countries to promote transparency by producing fossil fuel subsidy inventories by the next meeting.

Transition Roadmaps Need to Address Barriers

A strong message across the conference was that credible transition roadmaps cannot stop at deployment targets or emissions pathways. They must address the institutional, financial, legal, political, and social barriers that can stall even technically feasible transitions.  

Discussion also underlined that roadmaps must be inclusive to be credible and durable. Indigenous leaders, frontline communities, and workers from the oil, gas, and coal sectors brought important perspectives on how orderly transition planning can help protect livelihoods, uphold rights, and ensure benefits are shared more equally.

“Roadmaps have to be more than a technical pathway to a zero-carbon future. They need to address the myriad institutional, financial, and political barriers that hold back progress. In particular, there can be no just transition without a plan for revenue replacement in fossil fuel dependent countries."

Paola Yanguas, policy advisor, IISD

Balancing Transition Goals with Fiscal Stability  

At Santa Marta, it was clear that a poorly managed phase-out of fossil fuels could put government budgets at risk, undermining their capacity to finance the transition.

Discussions at the academic conference highlighted that declining fossil fuel revenues, combined with rising public investment needs, will make it difficult for many countries—particularly fossil fuel exporters—to balance transition goals with fiscal stability.

Across discussions, there were calls for stronger international backing, including improved access to concessional finance, debt relief mechanisms, and enhanced technical assistance.

“Transitioning away from fossil fuels requires significant investment. This is not only a fiscal challenge—it is also about balance of payments and political economy. For many countries, keeping their debt at sustainable levels will hinge as much on foreign exchange generation as on fiscal issues."

Yanne Horas, associate, IISD

Investor–State Dispute Settlement Enters the Debate

An issue long familiar to investment specialists, but so far absent from climate negotiations, moved further into view: the role of investor–state dispute settlement (ISDS) in shaping the politics of transition.  

ISDS is a mechanism embedded in many investment and trade agreements that allows investors to challenge governments in international arbitration. Fossil fuel investors are the most frequent users of this system to target, delay, or water down green policies.  

The conference recognized ISDS as a significant structural barrier to climate progress, placing removing access to ISDS for fossil fuel investors at the heart of the academic conference agenda.

As Lukas Schaugg notes, many climate and energy policy-makers are not yet aware of the threat ISDS poses.  

“Santa Marta has put ISDS on the table in a way no previous climate summits have done. The next test is whether a coalition of willing countries can move from recognition to action, starting where the political and legal case is strongest. States should swiftly remove their exposure to fossil fuel ISDS claims and then pursue a broader exit from this mechanism.”

Lukas Schaugg, policy advisor, IISD

What’s Comes After Santa Marta

Looking ahead from Santa Marta, one challenge is to better connect, align, and sequence the many efforts already underway. Participants pointed to growing political momentum to transition away from fossil fuels, from first-mover coalitions to country-led partnerships. They also warned that momentum could be diluted if these efforts are too loosely connected or unevenly coordinated.

IISD’s President and CEO Patricia Fuller said: “The process launched in Santa Marta will help connect and strengthen initiatives already underway, including the second UNFCCC global stocktake and Brazil’s COP 30 global roadmap initiative. With productive, results-focused discussions like we've seen at Santa Marta, among 57 countries plus a wide range of organizations, we can expect momentum for the transition away from fossil fuels to increase. IISD stands ready to contribute to the work streams that have been identified, particularly on finance, with a focus on the fiscal, debt, and subsidy issues that help drive the clean energy transition. As host of the COFFIS secretariat, we will work to ensure that the phase-out of fossil fuel subsidies contributes to this transition."

Santa Marta was not intended to be the end of the process, but the start of a new platform for cooperation. Colombia framed the conference as the beginning of a broader climate democracy: a space where governments, civil society, Indigenous Peoples, workers, and experts can confront difficult issues together and build a more action-oriented agenda.

Ireland and Tuvalu’s announcement that they will co-host the next conference gave this process a clear next step. Ireland emphasized that the decision was deliberate and meaningful, bringing together two island nations from different regions with a shared commitment to keeping equity at the heart of the transition. Tuvalu stressed that the next phase should confront fossil fuel dependence, debt, and the financial system.

"This is a country-driven process, backed by a scientific panel and technical partners ready to support the hard work ahead. Existing coalitions, including COFFIS, are ready to support this process through technical support and by connecting Santa Marta with other existing forums, including financial platforms." 

Vance Culbert, senior policy advisor and COFFIS Secretariat manager, IISD

Photo credit: IISD/ENB | Mike Muzurakis

(This piece first appeared in the Hill Times on 20 April 2026. Reprinted with permission from The Hill Times.)

Last month saw the release of Canada’s long-awaited nature strategy, an ambitious plan to deliver on its international commitment to protect 30 per cent of the nation’s lands and waters by 2030, backed by a significant investment of $3.8-billion.

The strategy includes a significant expansion of terrestrial and marine protected areas; major support for Indigenous-led conservation; and the launch of Canada’s first National Water Security Strategy, among other laudable and urgent goals. But while the strategy is focused on domestic priorities and action, Canada must also continue to think beyond its borders.

We have a strong track record here: our country’s leadership in the global fight against biodiversity loss is well established, and perhaps best reflected in the Kunming-Montreal Global Biodiversity Framework, the historic international agreement to halt and reverse biodiversity loss by 2030, signed in Montreal in 2022.

Canada is also putting its money where its mouth is. Contributions to nature protection overseas have been complemented with climate financing—particularly through the Partnering for Climate initiative, also launched in 2022. This means efforts to protect nature often go hand-in-hand with efforts to build resilience to the impacts of climate change. These investments in what we call “nature-based solutions” are cost-effective and have yielded significant economic, social, and environmental returns.

In extraordinary times defined by conflict, economic uncertainty, social unrest, and ecological crises, Canada must be increasingly strategic in the investments it makes overseas.

As the government prepares a spring economic update to match this moment, its international support of climate action and nature protection is coming under more strain—and scrutiny—than ever. Increasingly, these investments must show clear benefit to both our international partners and Canadians alike.

Programs like Partnering for Climate give us ample evidence for making this case.

To start, building resilient communities and ecosystems abroad is a proven way to create new economic opportunities for Canada. We need to continue to invest in healthy, multidimensional relationships with other nations—a “dense web of connections across trade, investment, culture,” as the prime minister recently said. And not just with the so-called middle powers; economies from across Africa, Asia, and Latin America are poised to drive the next wave of global demand.

Partnering with these countries is in this country’s direct interest: in strengthening their resilience we are supporting new, reliable markets for Canadian investments, goods, and expertise in clean technology, critical minerals, sustainable finance, and resilient infrastructure.

Furthermore, as these nature-based projects help address environmental drivers of instability, we see local populations—as well as Canadians living and working abroad—thrive in safer, more predictable contexts, which in turn creates more stability for future investments.

There’s also the benefit of showcasing Canadian expertise outside our borders. The federal government’s climate financing for developing countries over the last decade has enabled Canadian organizations to deploy in-demand knowledge and skills in addressing the challenges posed by climate change at the global, national, and local levels.

My organization, the International Institute for Sustainable Development, has partnered with governments, community groups, and local businesses around the world on nature-based solutions for both climate mitigation and adaptation—with tangible results. Whether it’s guiding national governments through the early phases of adaptation planning or working on implementation to ensure policies are improved, rivers are restored, and trees are planted, the impact is huge. And throughout this time, the maple leaf is often front and centre, building a tremendous amount of goodwill for Canada.

These projects have leveraged Canadian funding and expertise while collaborating closely with governments abroad, many of them allied and aligned with Canadian interests. They are the kinds of projects that scale well, can attract private capital, keep communities and cities livable in the Global South, and offer lessons tested by others for how our own municipalities, parks, and governance structures can adapt to changing conditions.

Canada’s reputation across regions like sub-Saharan Africa has been growing in recent years thanks to the tangible benefits of this support. This matters for trade. This matters for coalition building and global negotiations on a range of topics. We can show the world Canadian leadership is not just pragmatic, but principled.

While some countries are abandoning relationship-building efforts, Canada can strategically step up. Not solely as a donor, but as a partner and investor building momentum that unlocks progressively greater economic, social, and environmental returns.

States and regions, whether they are producing or importing fossil fuels, are where the realities of the energy system are felt most directly. They host extraction sites, refineries, power infrastructure, workers, supply chains, and communities. They also carry many of the consequences when fossil fuel markets become volatile: higher costs, pressure on public budgets, uncertainty for households and businesses, and growing exposure to economic shocks. That is why today’s context does not weaken the case for transition. It strengthens it. 

For fuel-importing regions, oil and gas price spikes can quickly translate into higher energy costs, supply pressure, and political demands for emergency subsidies. That makes the case for cleaner, more secure, and more locally rooted energy systems more compelling. 

Subnational governments do not control everything, but many do have influence over planning, infrastructure, industrial development, public transport, electrification, and support for renewable deployment. These are not abstract climate actions. They are central components of economic resilience and energy security.

For fossil fuel-producing regions, the challenge looks different but is no less urgent. Price surges may bring temporary revenue gains, but windfalls are not the same thing as long-term stability. 

Regions that depend heavily on fossil fuel production still face the risk of future decline in demand, fiscal overdependence, and economic disruption if they do not use periods of strength to prepare for change. 

 

The question is not whether a boom feels comfortable in the moment. It is whether a more resilient and sustainable future is being built. Some subnational governments are already showing what this can look like. Scotland has established a Just Transition Fund to support communities and projects linked to the net-zero transition. East Kalimantan in Indonesia has created a Regional Consultation Forum bringing together government, workers, companies, academia, media, and civil society to help shape transition planning. In Brazil, states including Paraná, Entre Rios and Santa Catarina have moved to restrict fracking. Quebec has banned oil and gas exploration and production entirely. In India, Uttar Pradesh’s solar policy has helped accelerate rural solar uptake, showing how subnational energy policy can support a different development path.

These examples are not identical, nor should they be. States and regions start from very different places. Some are trying to reduce dependence on imported fossil fuels. Others are trying to reduce dependence on producing them. Some are already moving. Others are only beginning. But they are all confronting the same underlying reality: fossil fuel dependence leaves regions exposed, and that exposure is becoming harder to ignore.

This transition is not without challenges. One of the hardest issues is economic diversification in regions that depend on fossil fuel revenues and jobs. There are still too few strong examples of success, especially for subnational governments working with limited powers and fiscal mobility. That is precisely why the issue needs more practical attention.

National governments and international agreements remain essential. But they are not sufficient on their own. 

The success of the transition will depend on whether the regions at the centre of energy systems can anticipate risks, seize opportunities, and act early enough to shape their own futures. 

 

That is why the Under2 Coalition and the International Institute for Sustainable Development have developed a toolkit for subnational governments on transitioning away from fossil fuel production. It is not a formula, and it does not pretend that every region faces the same choices. But it is meant to support first movers — those already asking what practical steps they can take now.

High oil prices do not remove the case for transition. They sharpen it. For regions that import fossil fuels, they underline the value of cleaner and more secure alternatives. For regions that produce them, they are a reminder that temporary windfalls should be used wisely. In both cases, the message is clear: the most resilient regions will be those that use today’s instability to build tomorrow’s security.

At this critical moment when spikes in oil and gas prices and tightening supply are translating directly into material hardship for people and communities, some 50 countries are coming together in Santa Marta looking for solutions for the transition away from fossil fuels. They are no longer discussing if the transition should take place, but rather how it should happen.

The coalition has a critical opportunity to help avoid future market shocks by committing to develop roadmaps to transition away from fossil fuel reliance. Such commitments would reinforce broader international efforts, including the COP 30 Presidency’s roadmap for the transition.

If the direction is clear, the real question is execution: what does a credible roadmap for the transition away from fossil fuels actually require? Experts from all over the world are ready to support countries in this process. Research into how to design effective roadmaps by the International Institute for Sustainable Development, E3G, ECCO, SEFIA and Observatorio do Clima identifies nine elements, drawn from the strongest existing examples:

1. A roadmap needs a plan to coherently reduce both fossil fuel production and consumption

While the balance will differ depending on national circumstances—whether a country is a producer, consumer, exporter, or importer—both sides need to be addressed. The transition away from fossil fuels means reducing production, whilst also cutting demand through whole-economy electrification (industry, transport, heating and cooling, etc.), matched with power sector decarbonization. All of this will need to sit alongside a rapid scale-up of clean energy systems, including renewable power, grids and storage, energy efficiency measures, electrification, energy market reforms, digitalization, and clean fuels. Paths may differ depending on dominant fuel types, reliance on fossil fuel revenues, the scale of reserves, and other factors.

2. Energy access and affordability

Over 666 million people worldwide still have no basic access to electricity. Access to affordable energy is a fundamental driver of human well-being, economic growth, and the achievement of global development goals. Roadmaps should clearly set out how universal access and affordability will be achieved and sustained.

3. Fossil fuel subsidy reform

Fossil fuel subsidies reached USD 921 billion globally in 2024, and are expected to increase in light of the current oil and gas crisis. While there have been many diplomatic commitments to phase out fossil fuel subsidies, reform efforts have stalled. This is therefore a key entry point for roadmaps, as public finance for fossil fuels distorts markets, raising barriers to renewable energy scale-up and undermining energy security. Redirecting these subsidies and other incentives toward clean energy helps align public finance with the Paris Agreement (Article 2.1c). Roadmaps could set out action plans towards phasing out fossil fuel subsidies.

4. Just transition and economic diversification measures

Just transition measures are essential to support workers, communities, and regions dependent on fossil fuel industries during the transition. At the same time, diversification—through green industrial strategies—is critical to sustain revenues and prosperity of fossil fuel dependent states as fossil fuel demand peaks and declines through the transition. Importantly, justice principles must guide economic diversification strategies to ensure new transition investments do not replicate the “unjust legacy” of the fossil fuel industry, which often excluded local voices and prioritized resource extraction over community welfare and human rights. Roadmaps could include targets, strategies, policies and measures for both just transition and economic diversification.

5. Decommissioning and cleanup

The safe and just removal, decontamination, and dismantling of fossil fuel infrastructure and sites is essential for meeting both climate goals and the protection of communities and ecosystems. Roadmaps could include timelines and measures for decommissioning fossil fuel infrastructure.

6. Managed and manageable finance

Just, orderly, planned transitions depend on strong investment planning to secure finance for key infrastructure such as grid management and electrification, while also preparing for revenue shifts, managing stranded asset risks, and financial system stability—especially in fossil-fuel dependent economies. For developing countries, this hinges on access to dedicated, predictable, and reliable international financial support especially non-debt creating public finance and scaled blended finance that leverages concessional loans and grants to unlock private investment.

7. Strong participatory governance structures

This flows from the principle of procedural justice and it allows, in practice, strong participation by potentially marginalized groups.

8. Clear deadlines and transparency

Time horizons and robust monitoring, reporting, and verification systems ensure accountability and implementation. They also strengthen institutions through better data systems, regulatory oversight, and enforcement mechanisms. The best existing examples of roadmaps are time bound and oriented to clear delivery horizons.

9. Whole-of-government coordination 

National roadmaps won’t work without different ministers working together. Embedding just transition strategies within clear transitioning away from fossil fuels goals keeps social and economic measures aligned with the overall transition, preventing fragmented approaches and conflicting policy signals.

Looking Ahead to Santa Marta and Beyond

Not all elements will apply equally everywhere. For example, Global North countries do not face energy access challenges but may still need to address affordability, and not all countries provide fossil fuel subsidies. Still, the nine elements offer a strong, practical foundation for governments developing transition roadmaps.

The global transition away from fossil fuels is moving beyond pledges towards a decisive implementation phase. Political appetite for structured cooperation is evident. The central challenge is to combine ambition with realistic roadmaps for delivery: ensuring coherence, coordination, and implementation across national plans, international coalitions and sectoral initiatives. In the coming months – at Santa Marta and beyond, and through the COP 30 Presidency’s roadmap – governments have a real opportunity to accelerate the transition by designing roadmaps that are coherent, coordinated, and contain all the essential elements.

The lesson from the current crisis is clear: resilience is not built by shielding economies from change, but by accelerating it. The countries that move first will not only reduce their exposure to future shocks – they will shape the terms of the transition itself.

A USD 4 Trillion Blind Spot in Public Finance

According to official reports gathered in the Global Tax Expenditures Database, governments globally forgo an estimated 23% of their tax revenue through tax expenditures, including exemptions, deductions, credits, and preferential rates. Official revenue forgone figures amount to approximately USD 4 trillion annually. Although this entire amount cannot or should not translate into increased revenue (as discussed below), tax expenditures remain one of the largest but least scrutinized sources of revenue leakage.

At a time of tight fiscal space, high debt burdens, and increasing demands for investment in climate action, infrastructure, health, and education, this scale of forgone revenue cannot be ignored. Disentangling tax expenditures that represent value for money from those that are redundant, ineffective, or too costly is vital to strengthening domestic resource mobilization and reallocating public resources to national development priorities.

This has been explicitly recognized at the international level. The Compromiso de Sevilla, the outcome document of the Fourth Financing for Development Conference (FfD4), and the Addis Tax Initiative (ATI) Seville Declaration on Domestic Resource Mobilisation, both underscore the importance of improving the governance and transparency of tax expenditures.

Yet, nearly 12 months after these commitments, progress in operationalizing tax expenditure reform remains limited. This raises an important question: What is holding countries back?

A central constraint lies in the political and institutional complexity of reform. Tax expenditures often benefit specific constituencies, creating vested interests resistant to change. Administrative challenges further complicate reform efforts, particularly in contexts with limited human resources and financial capacity.

In addition, another fundamental barrier persists: the lack of regular, reliable, and comprehensive information. In many countries, governments do not have a complete picture of the fiscal cost, distributional impact, or effectiveness of their tax expenditures. Nor do they have sufficient insight into the practices of other countries. Without this, it is virtually impossible for governments to make informed decisions about which benefits to remove, adapt, or maintain—or to justify them politically.

In this context, tax expenditure reporting is not a technical issue; it is a precondition for reform.

 

The Compromiso de Sevilla nudged countries in this direction. The ATI Seville Declaration took it further, with partner countries agreeing to “work toward the development and adoption of joint voluntary minimum standards for tax expenditure reporting.” The challenge now is to translate this commitment into concrete action.

From Political Commitment to Practical Standards

International processes, such as the annual deliberations of the G7 and the G20, represent critical political opportunities to advance this agenda. They provide a platform to move from broad commitments to specific, implementable measures.

The Coalition on Tax Expenditure Reform (COATE) is uniquely positioned to support this next step. It is a global, multistakeholder initiative founded by five institutions: the International Institute for Sustainable Development, the Council on Economic Policies, the German Institute of Development and Sustainability, the International Centre for Tax and Development, and ODI Global. It launched in 2025 as a Sevilla Platform for Action initiative and has been endorsed by the governments of Brazil, France, Guinea, Nigeria, Rwanda, Senegal, Spain, and the United Kingdom—as well as, more recently, by the United Nations Development Programme.  

Building on the momentum generated by FfD4, COATE is urging governments, international organizations, and multilateral initiatives to adopt global voluntary minimum requirements for tax expenditure reporting. Increasing access to information on the use of tax expenditures would enhance transparency and accountability, improve the evidence base for policymaking, and create conditions for effective reform.  

COATE's proposal builds on the normative approach behind the Global Tax Expenditures Transparency Index and is structured around three core principles: 

Regularity

Regularity means that governments produce tax expenditure reports annually, so that political decision-makers and stakeholders know when to expect this information and which time span those reports are covering. Governments should link the reports to the budget cycle, to enhance coordination and organize the exchange of data and information among relevant governmental bodies.

A minimum requirement would call on governments to produce annual tax expenditure reports and integrate these reports into the budget cycle.  

Specificity

Specificity means that governments provide information at the level of individual tax expenditure provisions. Provision-level data is a prerequisite for TE evaluation and, hence, key to any informed debate about tax expenditure reform.

A minimum requirement would call on governments to produce a comprehensive inventory of tax expenditure provisions as part of each report. The inventory should include information on the legal basis, policy objectives, and targeted beneficiaries for each provision as well as revenue forgone estimates for each tax expenditure covered, or an explanation when estimates are not available.  

Transparency

Transparency means that governments publish information on all tax expenditures in use.

A minimum requirement would call on governments to publish the tax expenditure report in a way that makes it easily accessible to political decision makers, legislators, and the public in general.  

Taken together, these principles define a pragmatic and scalable approach to improving tax expenditure reporting globally.  

Tax Expenditure Reform Is a Non-Starter Without Regular Reporting  

At first glance, tax expenditure reporting might seem like a technical exercise. In reality, it is an essential foundation for identifying ineffective or harmful tax expenditures, assessing trade-offs, and designing credible reform strategies.

The stakes are substantial. The previously referenced USD 4 trillion in revenue forgone illustrates the scale of resources at play. However, it is important to approach this figure cautiously.

Not all tax expenditures could—or should—be eliminated. Some provisions are structural features of the tax system and cannot be removed. Others are designed to address specific market failures or achieve policy objectives, such as incentivizing investment in clean energy or supporting low-income households. Reform may only free parts of the revenue foregone in question. Governments may choose to replace certain provisions with direct spending measures. Taxpayers may also adjust their behavior in response. Finally, any additional fiscal space generated through tax expenditure reform does not automatically translate into more financing for development, as governments will use the revenue according to their own priorities.

Tax expenditure reform is not always low-hanging fruit. It can affect the interests of powerful groups. For it to happen and succeed, there must be political will, and reform processes must be enabled by finance ministries and tax administrations equipped to undertake careful, context-specific analysis and implement such reforms. The support from international and regional organizations, such as the African Tax Administration Forum, the Inter-American Center of Tax Administrations, and the Economic Community of West African States, as well as other stakeholders such as COATE and its five founding organizations is vital.

These challenges cannot be overstated.  

Tax expenditure reform—and its potential to strengthen domestic resource mobilization—is a non-starter unless we create the necessary informational foundations.

 

The immediate required next step is to set standards for regular, specific, and transparent tax expenditure reporting. The annual deliberations of the G7 and G20 are the next major political moments to implement the commitments from FfD4. By agreeing on minimum standards for reporting, G7 and G20 members would lead the drive to improve tax expenditure reporting across the globe.  

Fisheries Subsidies

Members celebrated the entry into force of the 2022 Agreement on Fisheries Subsidies, which bans support to illegal fishing, to the fishing of already depleted stocks without efforts to restore them, and to unregulated fishing on the high seas. The MC14 decision reinforced members’ collective commitment to complete the unfinished parts of the deal, with additional disciplines on subsidies that contribute to overcapacity and overfishing more broadly. The decision was not a given; Indonesia insisted that its concerns regarding the interaction of the 2022 agreement and the United Nations Convention on the Law of the Sea be registered, which, in the end, was done by distributing its statement formally as a Ministerial Conference document. 

"WTO members have sent a clear political signal that concluding further rules to curb subsidized overfishing remains a priority. Now, they need to get back to work to make this renewed commitment a reality," says IISD expert Tristan Irschlinger.

Development Issues 

Ministers also approved decisions that had been concluded in Geneva regarding work on the special and differential treatment provisions of the WTO's Sanitary and Phytosanitary Agreement and the Technical Barriers to Trade Agreement. The Sanitary and Phytosanitary Agreement governs trade measures imposed for food safety and animal or plant health, for example, so that vegetable imports don't carry pests or diseases. The Technical Barriers to Trade Agreement governs trade measures that impose other kinds of technical rules, like general product safety requirements. The ongoing work is meant to make the provisions more operational and effective, for instance by addressing the reality that many developing countries lack the capacity to respond quickly to measures their trading partners notify by providing longer comment periods for new measures being introduced. Ministers also approved a decision on enhancing the participation of small economies in global trade.

As the political stakes rose, however, decisions got harder. 

WTO Reform

After several long nights, ministers managed to agree on a direction for the WTO reform discussions that have gained pace in Geneva over the last few months. Talks will continue to focus on decision making at the WTO, development, and what are called "level playing field" issues.

Members are debating how different decisions at the WTO should be made, and how the principle of agreeing by consensus can be maintained but perhaps modified for different kinds of decisions. Development talks largely centre on how the principle of special and differential treatment should apply, given members' different development realities, while the discussion on levelling the playing field looks at the impact of, and responses to, more interventionist economic policies and growing priorities like climate change and the digital economy. The discussions will be reported back to the General Council every 6 months until MC15. 

Getting to this level of detail was no small feat in the current political environment. "MC14 stabilized a balanced reform agenda for an honest conversation among WTO members about a new set of rules to play by," says IISD Director of Trade Alice Tipping. "This is an important achievement that needs to be turned into action." 

Formal adoption of the reform agenda, however, was conditioned on agreement to rules on customs duties on digital trade, and here agreement proved impossible. 

E-commerce and Intellectual Property Rights Moratoria

The most immediately significant decision on the table was the extension of the confusingly named e-commerce moratorium, which is essentially an agreement that governments will not impose customs duties on electronic transmissions that travel across borders. What exactly is meant by "electronic transmissions" has never been clear. The concept likely covers digitized goods, like downloadable books, but it could also include the content of streaming services. The key point of disagreement at the Ministerial was whether the moratorium should be extended, and if so, for how long. The United States led pressure for a permanent moratorium, but several developing countries were firmly opposed, citing a need for policy space. The facilitator’s draft for a decision at the Ministerial listed options for an extension between 4 and 6 years, but agreement wasn't reached. 

Another issue, quickly linked to the e-commerce moratorium, was a moratorium on non-violation complaints (NVCs) under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. NVCs are complaints that may be brought against a member even where the member is acting legally under WTO rules, but nullifies or impairs expected trade benefits for another member. The NVC clause prevents these kinds of complaints from being brought. Early in the conference, some developing countries linked the timelines of the two moratoria, so that if they were obliged to agree to a longer e-commerce moratorium, they would also get a longer TRIPS NVC moratorium. In the end, neither were agreed. 

Also not agreed was a long-fought decision that would provide least developed countries (LDCs) with extended special trade treatment under WTO agreements after they graduate from LDC to developing country status. 

The fact that disagreements over digital trade policy blocked other major issues at the Ministerial outcomes is partly a result of the agenda on the table but also demonstrates how the stakes on the issue have risen, notes IISD expert Rashmi Jose. "Digital trade is becoming a central issue in the politics of trade policy," says Jose. "The range of digital trade issues, and their importance on the WTO agenda, is only going to grow." 

The Plurilaterals at MC14

Participants in the plurilateral Investment Facilitation for Development Agreement, now counting 129 WTO members, once again requested the incorporation of the text into the WTO's treaty framework. Türkiye's minister took the floor in the opening plenary of the Ministerial to lift his country's objection to the decision, leaving only India, which remained resolutely opposed. 

Participants in the E-Commerce Joint Statement Initiative, which includes 66 WTO members, announced the adoption of a set of interim arrangements that will enable their agreement to come into force and be implemented, even as they continue to aim to have the agreement woven into the WTO's treaty system. 

Back in Geneva…

Exhausted diplomats woke after overnight flights home to find that decisions on the WTO reform package, as well as the e-commerce and TRIPS non-violation moratoria and on LDC issues, had been sent back to the General Council for further work. The e-commerce moratorium, which was due to expire at the end of March, presumably now has, at least unless and until members agree to reinstate it at the General Council's next meeting in May.

The lead-up to this meeting will be important to watch. The General Council has often been mandated to take procedural and institutional decisions about organizing work or funding. It has very rarely, if ever, been specifically tasked with taking substantive decisions that could not be agreed at the Ministerial level. That said, it has the authority to do so. Looking across the issues, the priority should be reaching a deal that enables fundamentally important discussions about the reform of the WTO, with its hard-fought and delicately balanced agenda, to move forward.
 

The escalating conflict between the United States, Israel, and Iran is sending shockwaves through global energy markets. Oil and gas prices have surged, driven by supply disruptions and heightened market uncertainty, with vast ripple effects on other commodities, particularly fertilizers.  

Products such as urea, used by corn, wheat and rice farmers, have seen price increases linked to disruptions in production infrastructure. As energy shocks work their way through the economy, they feed into broader inflationary pressures across countries. No nation is immune, but developing countries are most immediately and acutely hit.  

This is a classic supply-side shock: one that pushes prices up while slowing economic activity. It is also the third major disruption to global value chains in less than a decade, following the COVID-19 pandemic and the Russian invasion of Ukraine, with each episode leaving deeper and more persistent scars in developing economies. 

This is the third major disruption to global value chains in less than a decade. Each episode has left deeper, more persistent scars in developing economies.

 

A Dilemma for Central Banks

Such shocks are particularly difficult for central banks to manage. Inflation is rising, which would normally call for tighter monetary policy; yet growth is weakening, which would call for easing. Central banks often attempt to “look through” temporary shocks—but when disruptions are repeated and persistent, this strategy is harder to sustain.  

After years of liquidity expansion following the global financial crisis and the COVID-19 pandemic, concerns about inflation persistence and policy credibility have intensified. The risk that inflation expectations drift away from the central bank’s target means monetary policy may remain tighter for longer, even as economic activity slows.

Structural Risks and Uneven Exposure 

If the conflict persists, the risks could become structural across the most vulnerable countries. Net importers of oil and gas will see their energy bills rise and trade balance worsen.

Governments may attempt to shield households through subsidies, but at the cost of larger fiscal deficits. At the same time, higher food and energy prices increase pressure on already fragile social protection systems, further constraining governments that already face tighter fiscal limits than their advanced economy peers.

The exposure is particularly acute for low-income countries because food and other tradable goods account for a larger share of household consumption, making these economies more vulnerable to global price shocks, particularly in regions such as Sub-Saharan Africa. As a result, global price increases translate more quickly and more intensely into domestic inflation, leading to more acute social pressures and higher fiscal demands.

At the same time, financial conditions are likely to tighten. If central banks in major economies keep interest rates elevated—or delay easing—the cost of borrowing stays high for everyone. For countries that depend on external financing, this creates additional strain. Rolling over existing debt becomes more expensive, and access to new financing becomes more limited.  

This challenge goes beyond fiscal balances. Many lower-income countries carry significant exposure to private external flows and a highly indebted private sector. This means that if private borrowers default, governments are often left to pick up the bill, compounding the strain that already stretches public finances. 

No feasible degree of austerity measures will enable countries to meet their external debt obligations. On the contrary, cutting spending too sharply can be counterproductive, triggering recessions that ultimately undermine, rather than strengthen, debt repayment capacity. The need for coordinated international action thus becomes more critical. 

No feasible degree of austerity measures will enable countries to meet their external obligations. Treating debt challenges as temporary liquidity issues risks underestimating their structural and destabilizing effects.

 

Building Long-Term Resilience to External Shocks

Taken together, these dynamics highlight a broader shift in the global economy. External shocks are becoming more frequent, more persistent, and more interconnected. These pressures are not distributed evenly: low- and middle-income countries are disproportionately affected, reflecting greater exposure to external financing conditions, narrower fiscal space, and more limited economic diversification. Treating debt challenges as temporary liquidity issues risks underestimating their structural and destabilizing effects. In a more volatile environment, sustained pressures on fiscal and external accounts—combined with limited buffers—can more easily translate into crises.

As Kristalina Georgieva, Managing Director of the IMF, has noted, “think of the unthinkable and prepare for it.” Strengthening fiscal frameworks, improving debt management, and building more resilient energy and food systems will be key. The challenge is not only to respond to the current shock, but to adapt to a world where such disruptions are likely to recur—and where their implications for debt sustainability are increasingly difficult to ignore. This calls for a more integrated approach to financing and resilience. 

The Ukraine war taught Europe—and many other countries—the dangers of continued reliance on volatile oil and gas markets. In 2022, governments rolled out budget-crushing subsidies to the tune of USD 204 billion in the European Union (USD 1.66 trillion globally). While these vast sums helped soften the immediate shock, they addressed only the symptoms of the problem. The exposure to market volatility remained, and in many countries, subsidies were difficult to reverse when prices came down.

As energy prices surge again, governments are under renewed pressure to provide relief. The challenge is how to do so without repeating past mistakes. A new round of subsidies is certainly not the answer.  

The answer is not to make fossil fuels artificially cheap, but to support the people feeling the pressure.

 

The issue with fossil fuel subsidies is not only their cost. They also fail the long-term test of energy security. Rather than shielding economies from energy price shocks, they entrench dependence on fuels, the prices for which are based on volatile international markets. By keeping oil and gas artificially cheap, subsidies discourage investment in diverse, affordable, and domestically produced energy sources. True energy security comes from reducing that dependence, not subsidizing it. If governments roll out new subsidies now, they will only guarantee that the next price shock will repeat the pain.

So what should governments do when households are struggling with rising energy bills?

The answer is not to make fossil fuels artificially cheap, but to support the people feeling the pressure.

“Blanket” support measures disproportionately benefit richer households and energy-intensive industries. When governments reduce fuel prices for everyone, the largest subsidies automatically flow to those with the highest consumption patterns—people who own larger homes and drive multiple vehicles or energy-intensive industrial processes. In middle-income countries, the top earning 20% of the population receives 11 times the level of subsidies compared to the lowest.

Targeted support works differently. Instead of lowering fuel prices across the entire economy, governments can focus assistance on households that are struggling to pay their bills.

This time around, Europe should focus on targeted, effective, and sustainable forms of support to people and industries, helping break the costly cycle of fossil fuel dependence while building a more secure and resilient energy system.

 

Some governments have already taken this approach. The United Kingdom’s Cost of Living Payments, introduced during the 2022–2024 energy and inflation crisis, offered direct cash payments. Similarly, Germany’s reformed Wohngeld expanded the housing allowance program, increasing support for lower-income households and adding a component to reflect rising heating costs. By using these types of means-tested programs, governments can protect people’s purchasing power through direct transfers while still encouraging energy efficiency and a switch to clean alternatives.  

At the same time, public financial support to electrification, such as electric vehicles and heat pumps, can help households decouple their energy bills from volatile international markets. As more energy demand shifts to electricity generated domestically from renewable sources, exposure to global oil and gas price shocks declines, strengthening energy security over time.  

The 2022 energy price hike was met with hundreds of billions in fossil fuel subsidies. While several countries saw demonstrations for price relief, there were also demonstrations against the allocation of so much public funds for fossil fuels. Within a year, 12 countries led by the Netherlands launched the Coalition on Phasing Out Fossil Fuel Incentives Including Subsidies, or COFFIS, to start shifting away from costly fossil fuel support. Lessons learned from these countries in how to effectively remove subsidies now need to be applied to avoid creating new ones.  

This time around, Europe should focus on targeted, effective, and sustainable forms of support to people and industries, helping break the costly cycle of fossil fuel dependence while building a more secure and resilient energy system. 

The priorities of the Belt and Road Initiative, China’s flagship international infrastructure and economic development program, are shifting. To make the most of this new phase of investment, to ensure alignment with national development objectives, host countries should place public participation, transparency, and robust pre-investment assessments at the forefront of their approach.

Chinese policy-makers will soon gather for the 2026 "Two Sessions"—the annual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference (CPPCC)—where they will review early progress under China's 15th Five-Year Economic Plan, covering 2026-2030. Against the backdrop of new data showing record-high Belt and Road Initiative engagement in 2025 (engagement defined as both investments by Chinese companies and the value of contracts awarded to them), the sessions are set to reaffirm China’s commitment to the Belt and Road Initiative, while also signalling a clear evolution in priorities.

Since its launch in 2013, the Belt and Road Initiative has been synonymous with large, debt-heavy infrastructure projects. Today, China is diversifying its overseas investment, increasingly focusing on renewables, technology, and manufacturing, as well as more small-scale projects.

This shift places greater responsibility on host countries because the new “small and beautiful” projects rely far more on domestic regulatory quality—covering areas such as permitting; environmental, social, and governance (ESG) standards; land governance; and technology integration—than the earlier state‑to‑state megaprojects, where the primary host obligation was debt repayment. Host countries should pay attention to these shifts and adapt their investment governance and institutional frameworks accordingly to make the most of this new phase of Chinese investment.

As with all foreign investment, the benefits of these projects are never automatic. Project success depends on the strength, clarity, and coherence of domestic legal and policy frameworks, including those that take account of the distinctive features of Chinese financing and project delivery. Our message to host country policy-makers is clear: the real leverage point lies within their own systems, institutions, and regulatory choices.

From Megaprojects to Future Industries

For years, Chinese overseas investment was defined by multi-billion-dollar bridges, railways, and ports. A prominent example is the Addis Ababa–Djibouti Railway, a USD 4.5‑billion project financed largely by the Export–Import Bank of China and constructed by Chinese state‑owned enterprises. This project became emblematic of the early Belt and Road Initiative model: large, capital intensive, and heavily reliant on sovereign lending.

However, rising concerns about debt sustainability among partner countries—as well as changes in China’s economic priorities, with more onus on energy, advanced manufacturing, and green technologies (“modern productive forces” in Chinese policy speak)—have prompted a strategic diversification of the program. The new Belt and Road Initiative prioritizes

• digital infrastructure, including building the "Digital Silk Road" through telecommunications and data centres;
• renewable energy, with a shift away from coal toward wind, solar, and hydro projects; however, oil and gas investment under the Belt and Road Initiative remains significant; and
• "small yet smart" projects, such as smaller-scale, high-impact livelihood projects that are commercially viable and provide immediate social benefits.

Project success depends on the strength, clarity, and coherence of domestic legal and policy frameworks.

 

The Gap Between Opportunity and Reality

As the world’s largest sovereign creditor for around a decade, China’s footprint across Africa, Southeast Asia, Latin America, and Central Asia remains unmatched. The Belt and Road Initiative has the potential to break infrastructure bottlenecks, drive green energy access, and accelerate the United Nations Sustainable Development Goals. China’s shift toward smaller, greener, and more commercially viable projects also creates opportunities for host countries to advance priorities such as renewable energy, digital connectivity, local manufacturing, and regional integration—areas that often align more closely with national development plans than earlier megaprojects.

However, this scale and ambition alone also bring challenges that require more than just diplomatic goodwill to manage; they demand strong domestic governance and regulatory oversight. In short, host countries can only maximize the potential of these projects when they are anchored in legal frameworks that are transparent, inclusive, and aligned with national priorities.

When governance frameworks are poorly enforced, the costs of large-scale infrastructure projects can create tensions, and the results can be costly. The Mombasa–Nairobi Standard Gauge Railway is a case in point: while it is an engineering feat that is transformative for transport, the project faced hurdles due to weak environmental safeguards, resettlement controversies, and limited public participation. These challenges were not inevitable; they stemmed from a mismatch between ambitious economic goals and the domestic capacity to oversee them.

It Is Not the Investment—It Is the Governance

The "governance challenges" often associated with Chinese overseas investment, including confidentiality clauses, ESG risks, and debt vulnerabilities, are frequently cited as typically associated with Chinese lending and outward investment.

Part of an upcoming series looking at key aspects of the Belt and Road Initiative, this article argues otherwise: these risks are most acute where domestic systems are fragmented, opaque, or under-resourced. Opaque contracts and limited public oversight do not just hide debt; they erode the social licence needed for a project to succeed in the long term. Strengthening domestic governance, rather than focusing solely on the identity of the investor, is the most effective way to mitigate risk. By improving pre-investment assessments and contract negotiation, host countries can transform Chinese overseas investment into a genuine engine for sustainable growth.

In short, to get the most out of their engagement with the Belt and Road Initiative as the project develops, investment policy-makers in host countries should

• strengthen domestic pre-investment assessments to ensure that Belt and Road Initiative Phase II projects align with national development priorities, avoiding the misalignment and feasibility challenges seen in some earlier projects.
• improve transparency and public participation in Belt and Road Initiative investor–state contracts, especially for large infrastructure projects.
• build negotiation capacity—including through regional cooperation and peer learning—across project terms, financing arrangements, risk allocation, and ESG safeguards, so that host countries can secure balanced investor-state contracts, treaties, Memoranda of Understanding, and other instruments within the Belt and Road Initiative’s legal architecture.
• integrate ESG safeguards into domestic law and strengthen enforcement capacity so that all investors—Chinese or otherwise—operate under clear, predictable, and consistently applied rules rather than voluntary standards.

These approaches are not prescriptive. They are tools that countries can adapt to their own political, economic, and institutional contexts.

Unpacking the Belt and Road Initiative

Over the coming months, IISD will further explore key aspects of China’s overseas investment and how host country policy-makers can best navigate them, including the Belt and Road Initiative’s unique legal architecture, dispute settlement system, and the greening of the scheme.  

Each article will conclude with a forward-looking analysis of how developing countries can strategically engage with the Belt and Road Initiative to ensure the investments genuinely drive a greener, more transparent, and prosperous future.

IISD works closely with the developing-country investment policy-making community, including through our Investment Policy Forum community. IISD hosts the Secretariat International Support Office (SISO) of the China Council for International Cooperation on Environment and Development (CCICED). If you want to support more extensive independent research and policy development on Chinese overseas investment and its impact in host countries, we would be delighted to engage. Please reach out to [email protected] or [email protected].