Even the most ambitious national climate plans aimed at cutting emissions to meet the 1.5C global warming goal in the Paris Agreement often lack a vital ingredient for success: private investment.
With governments facing fiscal and political pressures, attracting private capital will be crucial for accelerating climate action in the coming years.
Yet many Nationally Determined Contributions (NDCs) still do not have the sector-specific plans, economic incentives, policy certainty, infrastructure investment and ongoing dialogue needed to break silos between the public and private sectors and bring more businesses on board.
“If you just have the high-level (NDC) target from the government in a vacuum, it’s not going to spur much business action,” said Greg Briner, senior manager for policy at the We Mean Business Coalition, which works with companies pushing for stronger climate action.
“But that target combined with … more specific policies and measures that get put in place as a result of that target-implementing process, or as a result of the NDCs, is where the magic starts happening,” he explained.
NDCs: late and inadequate
NDCs are voluntary climate action plans created by countries under the Paris Agreement. They include commitments such as expanding renewable energy, reducing fossil fuels, halting deforestation and other measures to cut greenhouse gas emissions and limit global warming.
First submitted in 2015 for the Paris Agreement, NDCs should be updated with more ambitious targets every five years, although some governments have not stuck to this timetable.
Last year, most countries missed an initial February deadline to finalise the latest round of plans, known as “NDCs 3.0” – and at least 50 countries, mainly developing nations, have still not done so.
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Although these national plans have helped drive emissions reductions in some sectors – including falling deforestation rates and greater investments in renewables – climate experts say progress remains far too slow to meet the Paris goals and urgent action is now needed.
Last November, the UN climate body projected that global emissions would fall by around 12% from 2019 levels by 2035, based on a preliminary assessment of new NDCs announced by countries that produce nearly 70% of the world’s greenhouse gases.
The Intergovernmental Panel on Climate Change has said countries should cut emissions far more rapidly, with a 60% drop by 2035 needed to limit global warming to 1.5C.
But for developing economies especially, the multi-billion-dollar costs associated with transitioning to greener energy systems and curbing their emissions are still a major barrier. Climate experts say governments and businesses need to move in step if NDC targets are to be achieved.
“There are positive actions going on but we need a significant ramping up. It’s not happening quickly enough,” said Briner. “It’s (about) building on these foundations that are being put in place.”
Nurturing the conditions for private investment
Last September, consumer goods giant Unilever published a report, entitled Bold Plans, Real Impact, examining how corporate climate transition plans and NDCs can support each other.
Among its recommendations, the report called for governments to provide clearer roadmaps for private-sector engagement. It also highlighted the need for stronger regulatory frameworks, market incentives, sector-specific transition pathways and integrated, economy-wide planning.
For businesses, the report recommended aligning their transition plans with national climate priorities, collaborating more closely with industry peers, strengthening monitoring and verification systems, and unlocking finance through public-private partnerships.
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A year earlier, the We Mean Business Coalition published a similar report, Time to Deliver: Business Call to Action for Ambitious and Investible NDCs.
This report urged governments – particularly in the G20 economies – to unlock private investment through sectoral targets, clean energy expansion, energy efficiency measures, fossil fuel phase-outs and commitments to halt deforestation.
It also stressed the importance of translating climate targets into concrete policies, backed by national implementation strategies and coordination across ministries.
Another key recommendation was the need for more transparent and inclusive dialogue with businesses throughout the NDC process. Early consultation with companies, the report said, should be embedded into the development and implementation of NDCs to ensure that climate plans reflect commercial realities.
Briner of We Mean Business said the economics of decarbonisation have changed dramatically over the past two decades.
“Ten to 20 years ago, decarbonising and investing in clean energy and electrification was seen as nice-to-have and a more expensive option, but these days, it simply makes business sense,” he said, referring to recent geopolitical events in the Middle East that have roiled oil and gas markets, pushing up fossil fuel prices.
However, upfront costs for clean energy infrastructure remain a major hurdle. Governments therefore need to complement climate policies with investments, concessional loans, grants, subsidies and tax incentives to help reduce risks, Briner added.
“Globally, there are still significant subsidies going to fossil fuels in different forms,” he said. “If we could redirect some of those current incentives away from fossil fuels and into clean electrification and clean energy, then that would certainly help.”
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Brazil’s sector-specific climate planning
Brazil’s NDC targets include expanding renewable energy – which already accounts for nearly 45% of its energy mix – ending illegal deforestation and reaching net-zero emissions by 2050.
According to Briner, Brazil’s climate strategy – known as Plano Clima – offers an example of how governments can provide businesses with clearer implementation guidance.
Years in development, the initiative sets out how Brazil intends to meet its climate goals through a series of sectoral plans covering areas such as energy, transport and land use.
“They’ve put together some pretty detailed, impressive plans,” Briner said. “Those are the types of things that will influence business models and business decisions. It’s this more detailed second layer of setting out national plans which is of interest to business.”
Last year, a transport coalition of more than 50 associations, companies and academia put forward a plan to help reduce the sector’s emissions and attract more than $600 billion in green investments in Brazil.
The previous year, 55 companies operating in Brazil, including Natura, Nestle, Itau and Unilever, called for more ambitious NDCs and clearer implementation policies, as well as encouraging climate-friendly investment and private-sector involvement.
Unilever, for example, has a global goal to create a deforestation-free supply chain and is partnering with a leading supplier in Brazil to ensure that soybean oil used at its factory there is not linked to forest loss.
Cheaper capital, high-quality projects
Although Brazil has relatively sophisticated capital markets, high interest rates still make long-term, low-carbon investments difficult, said Natalie Unterstell, president of the Talanoa Institute, a Brazilian environmental think-tank.
To address this challenge, Brazil is scaling up Fundo Clima – its National Climate Change Fund – as a central part of its implementation strategy by offering cheaper financing at scale.
But Unterstell said the private sector also needs to demonstrate that it can develop and deliver high-quality, low-carbon projects.
“Making Brazil’s policies investable is about making sure cheaper capital meets a pipeline of real, high-quality projects,” she said by email.
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While many companies have announced climate commitments, investment decisions have not always followed, she added.
“What companies can do better is move from targets to investment: adopt robust transition plans, and integrate carbon risk into core financial decisions,” Unterstell said.
On the government side, the priority is to “fix the signals”, she added. That means ensuring Brazil’s regulated carbon market – which is due to start in 2027 for sectors including iron and steel, cement, and oil and gas – operates with clear rules, credible enforcement and no delays, while aligning public finance with climate goals and providing long-term policy certainty.
“At the moment, both sides are waiting for stronger signals from the other, hence breaking that co-ordination problem is key,” she said.
Indonesia’s challenge: bridging the finance gap
Like Brazil, Indonesia is home to large areas of rainforest, but its energy mix relies far more heavily on fossil fuels, with coal providing about a third of supply. In its NDCs, Indonesia has pledged to reduce emissions by 31.9% by 2030 compared with business-as-usual levels, or by 43.2% with international support, on the way to reaching net zero by 2060.
Yet despite being promised more than $20 billion in international financial support from donor governments and investors under its Just Energy Transition Partnership, Jakarta has decided to row back on a plan to close a key coal power station early, saying it will focus on shuttering older and dirtier plants first.
To attract private investment to help achieve its emissions goals, Indonesia must provide policy clarity and long-term certainty, said Fabby Tumiwa, executive director of the Institute for Essential Services Reform, an Indonesian think-tank.
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“Any investor wants to understand the long-term risks of the country so that they can assess the risks properly and come up with a risk mitigation strategy. Uncertain policies basically make investors unable to mitigate the risks,” Tumiwa told Climate Home News.
“To make Indonesia’s climate policies investable for the private sector, the core task is to convert climate ambition into bankable, enforceable, risk-adjusted projects,” he said. “Investors do not only need targets; they need predictable revenue, credible off-takers, permits, grid access, currency-risk management and policy durability.”
Indonesia has estimated the investment needed to meet its NDC goals at more than $400 billion but has yet to clearly outline how businesses can directly contribute, said Egi Suarga, senior manager for climate at World Resources Institute Indonesia, a research organisation.
He said climate action should be framed as an investment opportunity rather than an economic burden.
Evolving policies and regulations
Over 100 Indonesian companies have adopted net-zero and are ready to ramp up decarbonisation given clear national guidance, according to the We Mean Business Coalition.
Indonesia’s Indika Energy is making heavy investments in renewable energy such as solar, while cement company Solusi Bangun Indonesia is also investing in cleaner energy, fuel efficiency and pushing better biodiversity management.
Meanwhile, Unilever’s climate transition plan states that the company is working with local government and environmental NGOs in Indonesia to protect and restore forests in Aceh and North Sumatra. It is also switching from natural gas to biomethane at its Indonesian sites.
One positive development, Suarga noted, is the creation of carbon pricing regulations aimed at attracting private finance, with an initial focus on the forestry sector.
“It can create a good climate for investors,” he said. “It doesn’t directly mention that this is for achieving the NDCs but there is no trade-off between development financing with environmental protections – so that’s a good start.”
Indonesia also needs stronger incentives and regulations for renewable energy, he added.
“We also have to think about other sectors now – like the energy sector and renewables,” Suarga said. “How can the government provide more incentives or facilitating regulations that can be more profitable to create a level playing field for renewables and fossil fuels?”
Ambition loop to drive action
Like Tumiwa, Suarga stressed the need for greater dialogue between the government and businesses so companies can understand better how they can contribute to Indonesia’s emissions targets.
“They know about sustainability because of the market and demands of the market… [but] I’m not sure whether [they] really understand about Indonesia’s target to achieve a certain amount of emissions reductions in the NDCs,” he said.
Currently, the government and private sector are largely working separately, Suarga added. The challenge lies in bringing them together to set targets, plan implementation and monitor emissions reductions. “It will need two to tango. The government should engage more with the private sector,” he emphasised.
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For the We Mean Business Coalition’s Briner, what is ultimately needed is an “ambition loop” in which businesses lead on emissions reductions while governments create policies that accelerate private-sector action.
“It really helps governments when they have a strong voice from business calling for policy action. It helps move things forward,” he said.
Without stronger policies and incentives, achieving NDC goals will become increasingly difficult to achieve and costly, experts say.
“It’s really a case of all hands-on deck right now,” Briner said. “We need all sides of this equation working together and trying to get this done because there isn’t an alternative.”
The post Two to tango: How governments can unlock private investment for national climate goals appeared first on Climate Home News.
Two to tango: How governments can unlock private investment for national climate goals
Global fossil-fuel emissions are set to fall by around 0.5% in 2026 amid the fallout from the Hormuz crisis, according to Carbon Brief analysis.
The US-Iran war has severely disrupted trade through the strait of Hormuz, causing a spike in oil and gas prices that continues to ripple around the global economy.
Each month of disruption – and each new flashpoint, such as in Yemen – is increasing the incentive to switch to alternatives.
Those alternatives include coal, with the latest forecasts pointing to a 1.2% rise in coal demand this year – apparently supporting media claims of a “return to coal” in the wake of the crisis.
Yet Carbon Brief’s analysis shows the rise in emissions associated with this increased coal use, much of which is unrelated to Hormuz, is set to be more than offset by declines for oil and gas.
The estimated overall impact on carbon dioxide (CO2) emissions from fossil fuels in 2026 is shown in the figure below and amounts to a reduction of around 0.5% from 2025 levels.
(Fossil fuels account for two-thirds of global greenhouse gas emissions.)
The emissions estimates for each fossil fuel are based on the latest forecasts from the International Energy Agency (IEA) for coal, oil and gas, in light of the ongoing global energy crisis.
For example, the agency initially estimated that global coal demand would decline this year. In its 2025 coal report, published in mid-December, it said that declining coal demand in China would outweigh the impact of pro-coal policies under US president Donald Trump.
In contrast, the latest update, published in September 2026, said that global coal demand would rise by 1.2% in 2026, instead of the small decline that had been expected.
The report highlighted the boost to coal demand from higher gas prices in the wake of Hormuz. However, there are limits to this, because few countries can switch from gas to coal at large scale.
The IEA’s latest report also noted the role of a strong El Niño, which is pushing up the need for cooling and depressing hydropower output in key markets. Other short-term factors are also affecting coal demand this year, including a rising amount of “wasted” wind and solar in China.
For gas, the IEA did not initially update its previous forecast that global gas demand would rise by 2.0% in 2026, which had been published in January of this year.
Its most recent forecast – published in July – already pointed to a 0.6% drop in demand in 2026. Since then, pressure on gas demand from high prices has only grown stronger.
For oil, there has been an even more dramatic shift in forecasts since the start of the year.
In its January 2026 oil market report, the IEA forecast a rise in demand in 2026 of 930,000 barrels per day (bpd). As shown in the figure below, this has been steadily revised downwards over the course of the year, as the Hormuz crisis was first ignited – and then extended.
By September, the IEA was forecasting a 2,500,000bpd drop in oil demand in 2026, equivalent to a reduction of 2.4% from 2025 levels.
(A 15 September research note from Morgan Stanley, not available online, found a “consensus” forecast of a 2,415,000bpd drop in demand in 2026.)
While there are many short-term factors at play in the shifting forecasts for 2026, it is clear that the latest energy crisis will also affect fossil-fuel demand in the next year and beyond.
For example, whereas the IEA initially forecast that oil demand would rebound in 2027 to well above 2025 levels, it is now expecting use of the fuel to be effectively flat for two years.
This puts a question mark over its previous expectation – published in October last year – that global oil demand would not peak until as late as 2030.
“For every month the conflict lasts, the probability of permanent [oil] demand destruction increases,” wrote Sverre Alvik, vice president at consultancy DNV in a late August analysis.
As fuel prices have surged, electric vehicles (EVs) have captured record shares of major car markets, from Australia and China through to Europe, Indonesia and Thailand.
In July, EV sales nearly doubled year-on-year in “new markets”, noted Alvik, pointing to countries outside China, Europe and North America.
The IEA says the 2027 outlooks for coal and gas are interdependent, with coal demand potentially increasing again if gas prices remain elevated – or dropping back if gas prices ease.
At the same time, governments in countries that had planned to rely on imports of liquefied natural gas (LNG) have been signalling shifts towards favouring domestic clean energy instead – or continuing to use coal for longer.
The current crisis, therefore, has the potential to not only lower fossil-fuel use and emissions in the short term, but also on a more lasting basis.
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The post Analysis: Global fossil-fuel emissions set to fall in 2026 amid Hormuz crisis appeared first on Carbon Brief.
Analysis: Global fossil-fuel emissions set to fall in 2026 amid Hormuz crisis
Aviation is on track to be responsible for 80% of the UK’s carbon dioxide (CO2) emissions by 2050, according to the Climate Change Committee (CCC).
Emissions from flying have more than doubled since 1990 – driven by rising passenger numbers – even as the climate impact of every other sector in the UK economy has fallen.
The UK does not have “credible” policies in place to reverse this trend of rising emissions, says the CCC in new advice to the government on future aviation policy.
The government has signalled its support for expanding Heathrow, the nation’s largest airport, while relying on “techno-fixes” such as “sustainable aviation fuels” (SAFs) to cut emissions.
Yet, even without Heathrow expansion, the CCC says aviation emissions are on track to be higher in 2050 than they are today – reaching 38m tonnes of CO2 (MtCO2).
As the chart below shows, this would account for most of the remaining CO2 from the UK economy, all of which would need to be removed from the atmosphere in order to meet the legal target of net-zero emissions.
Expanding Heathrow would add another 2.4MtCO2 in 2050, amounting to around 5% of all the UK’s emissions. (This would increase to 4.5MtCO2 when expansion is complete in 2054.)
With a final decision on Heathrow expansion expected by 2029, the government asked the CCC for its advice on whether the plan is compatible with the UK’s climate targets.
The CCC has concluded that the UK simply lacks sufficient policies to reduce aviation emissions and “expanding Heathrow would compound the problem”. In a press briefing, CCC chair Nigel Topping told journalists:
“The UK does not currently have a credible plan to reduce [aviation emissions] in line with net-zero, so that creates a serious challenge for meeting our climate commitments.”
The “jet-zero strategy”, launched by the previous Conservative government in 2022, set out plans to cut aviation emissions. However, the Labour government has since accepted that the strategy’s expectations for SAFs, electric planes and fuel-efficiency improvements were unrealistic.
The CCC says a “credible and robust net-zero policy framework for aviation” should be set out in a revised strategy, which is planned for 2027. Only then could Heathrow expansion be aligned with the net-zero goal, adds the committee.
As part of this new strategy, the CCC says the “aviation sector needs to take responsibility for its emissions”. It says policies should be designed based on the “polluter pays” principle, requiring the aviation industry to fund its own SAFs and CO2 removal.
Specifically, the committee says funding will be needed for “engineered removal” technologies, such as direct air carbon capture and storage (DACCS).
These technologies are currently “not yet available at the scale required”, but are vital for the kind of permanent CO2 removal needed to mop up aviation emissions, says the CCC.
(“Natural solutions” such as tree planting are the other main way CO2 is expected to be removed from the atmosphere. However, the CCC envisages these removals offsetting the remaining methane emissions from livestock agriculture in the UK, whereas it says “engineered removals” would be required to remove and store CO2 from flights.)
The CCC acknowledges that placing decarbonisation costs on airlines would likely lead to higher ticket prices. It estimates that this could mean an increase, in 2024 prices, of around £150 for a return trip to Alicante, Spain, and £400 for a return trip to New York by 2050.
However, it says this is preferable to a public spending approach, which would result in the roughly 50% of the population who do not fly paying for flight-related CO2 removals.
In addition, the committee notes that higher costs would help to manage demand for flights, which would otherwise be expected to increase considerably over the coming decades.
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The post CCC: Heathrow expansion could push flights to ‘80% of UK emissions by 2050’ appeared first on Carbon Brief.
CCC: Heathrow expansion could push flights to ‘80% of UK emissions by 2050’
A fifth of the world’s greenhouse gas emissions are linked to international trade in goods and services, a new tracker shows, spotlighting a little-studied issue that researchers say should be tackled by the UN climate process.
Currently, as part of the Paris Agreement, every country is responsible for counting and reducing the planet-heating emissions that are produced within its territory. Manufacturing countries, for example, may have high emissions even if what they make is exported for consumption elsewhere.
But new analysis from the European Climate Foundation (ECF) and climate consultancy Matière, based on the tracker’s data, shows that some countries have a high footprint of “imported emissions” from goods and services they ship in. These emissions are often ignored in the places where the products are consumed because they are not formally counted under greenhouse gas inventories.
In the European Union, for example, while domestic emissions have declined since 2015, imported emissions have remained unchanged, the analysis shows. In some countries, like Austria or Sweden, they are as high as the country’s entire annual carbon footprint.
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Former EU lead climate negotiator Jacob Werksman said that under the Paris Agreement, these traded emissions are accounted for in the countries where they are originally produced, but importing countries can also take responsibility for their consumption.
“It starts with a wide recognition by many jurisdictions around the world that we need to know the carbon content of these products, and we then need to agree what is a fair, effective, transparent and relatively easy-to-implement way of measuring that carbon in traded products,” he told a launch event for the trade emissions tracker, which contains data for different countries, sectors and gases.
Trade and its role in addressing climate change has become a higher priority at UN climate talks after a push led by emerging economies including China, India and South Africa led to the first trade and climate change dialogue held this year at the mid-year session in Bonn.
At the upcoming COP31 UN summit in Antalya, some voluntary initiatives like the Brazil-led Integrated Forum on Climate Change and Trade are expected to continue, but the issue does not feature in Türkiye’s Action Agenda of climate initiatives and formal negotiations are not scheduled on the topic.
China: the world’s top emissions exporter
As a manufacturing powerhouse, China ranks first in the new tracker as the world’s top-emitting country, but the data shows that a large chunk of the country’s carbon emissions – an amount larger than Brazil’s entire annual carbon footprint – are linked to products that are exported and consumed abroad.
Russia, Brazil, the US and the EU rank as the top destinations for Chinese trade-related emissions, which are mostly linked to components for power generation, basic metals like copper and lead, and non-metallic minerals like graphite and phosphorus.
Yet China is also the world’s top emissions importer, related mostly to agricultural products, fossil fuels and minerals brought from the US, the EU, Japan and India, among others. The US ranks second by a close margin, with both countries importing about 1.6 billion tonnes of CO2 equivalent.
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Richard Baron, ECF’s industrial policy and trade director, said Chinese clean energy products are key for reducing emissions around the world, adding that Europe is “not able to do without those technologies” for its energy transition.
“China has an emissions trading system that counts CO2 differently there. But if China and the EU were to agree on some kind of translation mechanism to say ‘this is how we measure it’, and companies can understand the protocol to navigate both markets, that would set the tone for a lot of other conversations,” he said at the platform’s launch event last week.
The analysis suggests that if the EU and China aligned their climate requirements for products, the resulting standards could influence trade flows representing about 7% of global emissions.
Baron said there’s “a plethora” of multilateral spaces to hold these discussions, including the climate and trade dialogue at the UN climate talks or the Climate Club at the Organisation for Economic Co-operation and Development (OECD), which seeks to cut industrial emissions.
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Controversial trade measures
Instruments like the Europe’s Carbon Border Adjustment Mechanism (CBAM) – a recent piece of legislation that penalises emissions-heavy imported products – are one tool that could be used to address trade-related emissions, said Antoine Oger, executive director at the Institute for European Environmental Policy.
He said a significant portion of imported emissions in Europe are already covered by CBAM, as it includes sectors like cement, iron and steel, fertilisers and aluminium. This then allows the EU “to engage in constructive dialogue with our trade partners”, he added.
But across diplomatic summits, including at UN climate talks, emerging economies have pushed back heavily against the CBAM and other trade measures. The most recent BRICS declaration adopted on Saturday by 11 such countries – including China, India and Russia – condemns “protectionism under the guise of environmental objectives”.
The declaration calls for the “elimination of such unlawful measures”, which they argue have “far-reaching negative implications for the human rights, including the rights to development, health and food security” of vulnerable communities.
“The question of responsibility is a political question,” Oger said. “These emissions exist – they are emitted somewhere to make a product that will be consumed elsewhere. So you can debate responsibility but the idea is for the two parts to recognise there’s a problem.”
The aim, he added “is not to point fingers, but to accept this is a reality of our emissions profiles and ask what we can do about it”.
The post International trade linked to 20% of global emissions – but imports ignored appeared first on Climate Home News.
International trade linked to 20% of global emissions – but imports ignored
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