Does Cop30 represent a new opening for a fossil fuel phase-out?
A plenary session at the Cop30 UN Climate Summit in Brazil on Saturday. If Brazil wants its Cop30 leadership to have a lasting impact, it must ensure that its new transition fund is more than symbolic. Photo: AP/Fernando Llano
Calls to reduce the use of fossil fuels are becoming impossible to ignore. At the United Nations Climate Change Conference in Brazil (Cop30), major producers are being pressed to begin planning for the phasing down of oil, gas, and coal in a just and orderly way.
For decades, climate negotiations have focused on emissions targets and clean-energy pledges while sidestepping the politically explosive question of whether — and how quickly — countries should phase out fossil-fuel production. Cop28 broke new ground by introducing the phrase “transition away from fossil fuels,” but real progress has remained slow and uneven.
At Cop30, Brazilian President Luiz Inácio Lula da Silva has reset the tone, declaring that “the Earth can no longer sustain the intensive use of fossil fuels” and calling for a clear roadmap for phasing them out.
Resistance to a phase-out has historically come from major producer countries and energy companies. But many governments with legitimate social-justice concerns are also reluctant to support such a move, fearing it would impede efforts to reduce inequality and fund essential services.
Brazil, a rising energy power with vast renewable potential, but also deep poverty and a thriving offshore oil sector, is a prime example. When Lula argued that fossil-fuel dependence must end in a “planned and just” manner, he signaled that an orderly phase-out can support development rather than undermine it.
For Brazil, the challenge is to strengthen its global standing while navigating its own energy transition. Lula’s plan for a national fund that would direct some of Brazil’s oil revenues toward the green transition reflects this balance: the rents of the old economy would be used to build the new one without harming workers and vulnerable communities.
Such an approach is not without precedent. Norway’s sovereign wealth fund, built on decades of oil revenues, invests heavily in low-carbon sectors worldwide and supports initiatives like the Amazon Fund. In Southeast Asia, East Timor — heavily reliant on petroleum and gas — has pursued diversification strategies financed through its own resource revenues.
These examples show that channeling fossil-fuel income toward the green transition is both feasible and necessary. For too long, the idea has been treated as taboo by climate advocates, owing to fears that even discussing oil money might legitimize continued extraction.
Avoiding the issue, however, leaves resource-dependent countries without the means to finance their transitions before revenues dwindle. Until climate finance reaches the scale required, governments must support equitable, justice-oriented energy transitions by channeling fossil-fuel revenues through well-governed sovereign wealth funds.
Early efforts to repurpose resource income point to a broader shift. A decade ago, few governments could imagine a future without fossil fuels. But economic realities have changed: renewables are now cost-competitive, clean-fuel technologies have matured, and developing countries increasingly view the energy transition as a pathway to greater productivity, resilience, competitiveness, and sovereignty.
Brazil’s experience illustrates this trend. Like many resource-rich countries, it has long relied on oil rents to fund social programs and infrastructure; between 2011 and 2023, only a tiny fraction of federal royalties flowed to its main climate fund.
It has since expanded its biofuels industry, started developing sustainable aviation fuels, and scaled up renewables, generating jobs in regions historically tied to extraction and showing that the energy transition can reinforce, not replace, a country’s development agenda.
Rising geopolitical tensions underscore the urgent need to diversify away from fossil fuels. With supply chains realigning, competition for global leadership in battery production, green hydrogen, sustainable infrastructure, and circular manufacturing is intensifying.
At the same time, the International Energy Agency expects oil demand to plateau by 2035 even without stronger climate action, while OPEC sees demand growing through mid-century. Whatever the exact timeline, economies that are slow to diversify will be left with stranded assets once global consumption declines.
That risk is especially acute for Brazil, which has invested heavily in deep-water drilling. Just weeks before Cop30, Brazil’s environmental agency granted Petrobras a license to drill at the mouth of the Amazon River — a highly sensitive ecological zone.
Petrobras and some government officials argue that exploration is necessary for energy security, while environmental groups say the decision undermines Brazil’s climate leadership.
A clear, well-structured transition plan — rather than ad hoc, case-by-case decision-making — might have prevented these tensions. If Brazil wants its Cop30 leadership to have a lasting impact, it must ensure that its new transition fund is more than symbolic.
The government should clarify revenue allocations, establish transparent governance structures, and encourage civil-society participation. Integrating the fund into the country’s ecological transition plan would help channel resources toward job-creating sectors such as sustainable fuels, renewable energy, green industry, and climate-resilient infrastructure.
Internationally, Brazil must use its Cop30 presidency to advance a co-operative approach to phasing out fossil fuels. The Beyond Oil and Gas Alliance — launched by Costa Rica and Denmark — has attempted to promote supply-side action, but major producers have stayed on the sidelines.
Brazil could help bridge this divide by encouraging parties to develop guidelines for an orderly and flexible reduction in fossil-fuel production.
These discussions must produce a roadmap with clear criteria for determining realistic timelines that reflect national capabilities and historical responsibilities, as well as mechanisms that build on existing institutions rather than adding new layers of bureaucracy.
Equally important, the fossil fuel phase-out must be central to climate negotiations. This would signal that multilateralism still matters; that countries can collectively confront even the most politically sensitive issues; that fossil fuels are no longer treated as untouchable; and that producer states are willing to engage in a structured, co-operative process.
Ultimately, the green transition depends on confronting the issue of fossil fuel revenues head-on. Otherwise, climate ambition cannot be reconciled with economic and political realities.
Brazil has taken a bold step by raising this question at Cop30 and framing transition as a socioeconomic opportunity, not just an ecological imperative. The challenge now is to turn the resulting discussion into a coherent plan — at home and globally.
- Adriana Abdenur is co-president of the Global Fund for a New Economy (GFNE).
- Copyright: Project Syndicate, 2025.
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