Santa Marta’s real test: rewriting the rules that protect fossil fuels

The summit that put rules—not just targets—on notice

Fifty-seven mostly Global South governments gathered in Santa Marta last week to do something climate diplomacy rarely does: move from declarations to road maps for a fossil fuel phaseout. Framed by some participants as a “coalition of the willing,” the inaugural summit is being cast as the launch of a Santa Marta process—an ongoing forum to convert phaseout pledges into concrete policy packages. Its success, however, will hinge less on the ambition of emissions targets and more on whether governments can neutralize the legal and financial machinery that still shields coal, oil, and gas.

Experts at the meeting urged governments to treat investor-protection treaties and trade rules not as background noise but as a primary obstacle to the transition. That diagnosis is timely. Around the world, the most consequential fights over climate policy are shifting from the science of carbon budgets to the hard architecture of markets—investment treaties, subsidy rules, export finance, and liability in the courts. Santa Marta’s credibility will be measured by whether it turns that diagnosis into a shared playbook.

What the new phaseout road maps are trying to solve

The phaseout conversation has matured from “whether” to “how.” The Santa Marta road maps reportedly center on practical levers governments control, including:

• Supply-side measures: suspending new exploration and licensing, setting decommissioning schedules and escrow requirements, tightening methane standards, and ring-fencing subsidies for clean alternatives.
• Demand-side measures: retiring coal-fired power, accelerating heat pump and EV deployment, and pricing or regulating fossil fuel use in industry and buildings.
• Just transition planning: retraining programs, social protection for affected workers, and investment plans for fossil-dependent regions.

These are the right building blocks. But they run headlong into a dense web of rules that were not designed for rapid fossil decline—and which, in practice, can fine governments for trying.

Where the phaseout hits the legal wall: investor-state lawsuits

Investor-state dispute settlement (ISDS) clauses in bilateral investment treaties and multilateral pacts allow companies to sue states for policy changes that harm their expected profits. Fossil fuel firms have used ISDS to challenge climate and energy decisions for years:

• Under the Energy Charter Treaty (ECT), utilities filed claims against the Netherlands over its coal phaseout law, seeking amounts reported to exceed €2 billion in total. The cases illustrate how even democratically enacted decarbonization policies can trigger multi-billion-euro exposure.
• In the Rockhopper v. Italy case, an oil explorer won an award of roughly €190 million after Italy banned new offshore drilling near its coast.
• Following the cancellation of the Keystone XL pipeline, TC Energy launched a claim exceeding $15 billion under legacy NAFTA provisions. Whatever the outcome, the sheer scale of potential liability can chill policy.

In response, a growing number of European governments have moved to withdraw from the ECT, and the European Commission has backed a coordinated exit, citing climate incompatibility. But even withdrawal can leave a “sunset clause” in place that protects existing investments for 20 years unless countries act together to neutralize it. That is precisely where Santa Marta’s coalition logic becomes powerful: coordinated legal reforms can shut off avenues that any single country would struggle to close alone.

Trade rules and the subsidy trap

Trade law can collide with industrial policy for clean energy. India’s 2016 loss at the WTO over local-content rules for solar panels is a reminder that procurement and subsidy design must be crafted to survive challenge. Meanwhile, fossil fuels still enjoy enormous, often hidden support. The IMF estimates total fossil fuel subsidies—explicit budgetary transfers plus underpricing of environmental and health externalities—at roughly $7 trillion in 2022; of that, about $1.3 trillion were explicit fiscal subsidies. Phasing these out is one of the fastest ways to cut emissions and fiscal waste, but it demands careful sequencing to protect vulnerable households and avoid political backlash.

The trade backdrop is shifting, too. Border carbon mechanisms and clean-technology industrial strategies are proliferating, making it essential that phaseout policies dovetail with trade compliance and access to markets. Poorly aligned measures risk sparking disputes that slow deployment just when speed is paramount.

Finance still tilts the field

Even when policies are legal-proofed, money talks. Export credit agencies and multilateral development banks (MDBs) set the tone for capital flows, particularly in emerging markets. While several OECD countries have curtailed backing for unabated coal and, to varying degrees, oil and gas, implementation remains uneven and gas exemptions persist. MDBs have pledged to align with Paris goals and raise climate finance shares, but their fossil-related carve-outs and slow project cycles can hold back grid upgrades and storage—the very infrastructure that enables coal and gas retirements.

Country platforms designed to finance managed coal exits have had a mixed start. South Africa’s Just Energy Transition Partnership (JETP), announced at $8.5 billion, and Indonesia’s $20 billion JETP set vital precedents but have struggled with disbursement pace, concessionality, and plans to replace retiring capacity with clean alternatives rather than new fossil assets. The lesson is not that transition finance cannot work, but that it must be faster, cheaper, and tightly conditioned on verifiable phaseout milestones.

Accountability politics is reshaping risk

If trade and investment rules can slow phaseouts, courts and public pressure are speeding them up. Climate litigation has expanded from corporate disclosure cases to suits demanding robust public policy. Europe’s highest human-rights court ruled in 2024 that insufficient climate action can violate rights, opening new avenues for claims against governments. And in Indonesia, survivors of the late-2025 Sumatra floods—an event that killed more than 1,200 people and damaged over 600,000 buildings—have sued the government, arguing environmental mismanagement worsened the disaster. Such cases turn abstract climate risk into concrete state liability.

Politics is shifting, too. Communications research and practitioners argue that climate action framed around health, safety, costs, and community resilience resonates better than doom-laden messaging. That reframing matters for phaseouts: households need to see lower bills, cleaner air, and good jobs, not just a far-off emissions curve. Governments that pair legal-savvy policy design with tangible local benefits will face fewer roadblocks—and win more durable support.

The Santa Marta test: from road maps to rule maps

If the Santa Marta process is to accelerate a fossil fuel phaseout rather than add another layer of talk, it should do five things quickly:

1. Create a shared legal playbook. Commission model legislation and treaty language that carves out bona fide climate measures from ISDS exposure, limits damages to sunk costs, and tightens definitions of “legitimate expectations.” Publish guidance on neutralizing sunset clauses when countries withdraw from treaties like the ECT, including inter se agreements among exiting states.

2. Launch a phaseout-safe-harbor initiative. Work with trade lawyers to draft WTO-compatible templates for clean energy industrial policies—procurement, local value strategies, and targeted subsidies—that avoid past pitfalls. Couple this with a voluntary notification mechanism so peers can flag design risks early, before disputes arise.

3. Align public finance—everywhere. Members should adopt a common standard for export credit and development finance: no support for new unabated oil, gas, or coal; strict methane controls on any transitional gas assets; and priority for grids, storage, efficiency, and clean heat. Tie concessional funds to measurable retirement of fossil capacity and worker transition milestones.

4. Insure the transition against litigation. Establish a pooled legal defense and risk facility that offers technical assistance to governments facing investor claims, and considers limited, conditional compensation for accelerated phaseouts—funded by carbon pricing revenues, redirected fossil subsidies, or a levy on fossil exports.

5. Put people first in the politics. Bake in health, affordability, and jobs metrics to every road map—air pollution reductions, household energy cost declines, and training placements per dollar spent. Communicate progress regularly. The Santa Marta brand will rise or fall on whether citizens feel the benefits quickly.

What success would look like in two years

By the next summit cycle, progress would be visible if:

• The number of ISDS cases challenging phaseout policies declines, not because countries pulled their punches, but because carve-outs and coordinated exits have closed off the most harmful legal channels.
• At least a dozen members have fully priced and redirected explicit fossil subsidies toward clean and social protection, with vulnerable households seeing net savings on energy bills.
• Export credit agencies participating in the process report a pivot in their portfolios, with a majority share to grid and flexibility investments that enable coal and gas retirements.
• JETP-style platforms disburse faster and cheaper funds against verified coal plant retirements and worker support, demonstrating a replicable model for managed decline.
• Courts increasingly recognize governments’ duty of care on climate while giving deference to well-designed, rights-conscious phaseout programs.

The battleground has moved—policy must follow

The climate community has long fixated on targets and timetables. Santa Marta is a sign that governments now understand the next battleground is the rulebook—who writes it, and whether it rewards clean systems or locks in fossil incumbents. The good news is that rules can be changed. But they won’t change themselves. If Santa Marta’s coalition can translate its road maps into rule maps—legal shields, finance standards, and accountability frameworks—it can do more than survive the machinery that protects oil, gas, and coal. It can retool that machinery to speed their orderly—and inevitable—phaseout.