Only five countries have active deadlines to phase out fossil fuel subsidies, report warns
03 November 2026
The research also found that information on “actual climate spending has weakened.”
- Several countries are scaling back climate-related expenditure disclosure in their budgets.
- International climate finance pledges are also weakening with fewer forward-looking commitments from developed countries.
The G7 commitment to phase out fossil fuel subsidies by 2025 expired without replacement, leaving only five of 71 assessed countries with an active phaseout pledge, according to new research published today (3 November 2026) by the TPI Global Climate Transition Centre (TPI Centre) at the London School of Economics and Political Science (LSE).
The research also found that information on “actual climate spending has weakened.” Three countries have disclosed climate-related spending for the first time since entering the Assessing Sovereign Climate-related Opportunities and Risks (ASCOR) assessment universe, but five others no longer specify how much they allocate to climate-related expenditure. This makes it harder to assess the priority governments are giving to climate objectives through their budgets.
The State of the Sovereign Transition 2026 report reviews the climate change performance of 85 high-, middle- and low-income countries using the new ASCOR framework Version 2.0. This is the first time these countries – which cover 90% of global greenhouse gas emissions – have been assessed against the new version of the framework, which includes novel elements such as a below 2°C benchmark and sector-specific indicators.
As pledges running to 2025 have expired without replacement, the number of countries with commitments meeting their proportional share of the international climate finance goal has fallen from seven to four. This comes as the new collective goal calls for developed countries to take the lead in mobilising at least US$300 billion a year for developing countries by 2035.
The TPI Centre found that across countries “recent emissions trends are particularly far from Paris alignment. Among 75 countries with a quantified 2030 target and a cost-effective benchmark, only seven have an emissions trend consistent with 1.5°C and 16 with Below 2°C.” Only 13 countries are on course to achieve the climate targets they have set, and eight of those are on track only because their 2030 targets allow absolute emissions to continue rising.
The research shows that the largest improvement over the past year comes from the new generation of Nationally Determined Contributions (NDCs), which has substantially expanded the number of countries with a 2035 emissions-reduction target. Since the last ASCOR assessment and after the UNFCCC’s extended deadline of September 2025, 37 more countries have set a 2035 target through an updated NDC. The authors confirm that this “represents progress in target-setting, but not necessarily in ambition. The new targets are generally no better aligned with the 1.5°C and below 2°C benchmarks [compared to countries’ existing 2030 targets].”
Different countries lead on different thematic pillars of the assessment: Trends evaluates historical performance in emissions and other metrics, Ambition assesses target alignment, and Policy & Finance covers a range of climate-related regulations and disclosures. Only four countries – Colombia, France, Portugal and Switzerland – rank in the top quartile of their income group across all three. This suggests that strong performance in one aspect of the transition does not usually translate into strong performance across the board.
The new sector-specific analysis in the ASCOR tool shows whether countries are decarbonising their highest-emitting sectors and whether they have set sectoral pathways and policies. Across the countries assessed, on average, electricity performs strongest, while substantial gaps remain in industry, transport and fossil fuel production.
Both COP30 and COP31 have been framed as implementation COPs. However, we see that countries are not only failing to translate their commitments into action but have also dropped their previous pledges. It is particularly concerning that these withdrawals are coming from developed countries that have agreed to lead the way towards a low-carbon future and to support developing countries in their transition. These mixed signals in global climate landscape once again underscore the importance of monitoring and accountability. Setenay Hizliok, Policy Fellow and Research Project Manager, TPI Centre
Climate commitments must be backed by measurable outcomes, transparent reporting and accountability. Slovenia’s Sustainability-Linked Bond reflects this principle by linking sovereign financing to national greenhouse gas emissions performance. Issuing the bond was an important first step, but delivering on our commitments will be the true measure of success. Ultimately, credible sustainable finance is about turning ambition into measurable results. Marjan Divjak, Director General of the Treasury Directorate, Ministry of Finance, Slovenia
Supporting the green transition means understanding the specific opportunities and constraints each country and sector faces. Through our Green Economy Transition approach, the EBRD works with governments and the private sector across our regions to help translate national climate ambitions into investable projects. Reports like this help sharpen our understanding of where further support is most needed. Maya Hennerkes, Managing Director, Environment and Sustainability at the European Bank for Reconstruction and Development (EBRD)
This updated ASCOR State of the Transition report provides sovereign debt investors with valuable evidence about how countries are managing the climate transition and building resilience. The challenge for investors is now to use this important analysis to inform investment decisions, engage sovereign issuers and seek stronger policies, and financing and implementation plans needed to deliver better outcomes. For asset owners like us, this is ultimately about protecting pension savers by helping to build the resilient economies and credible transition on which their long-term interests depend. Laura Hillis, Managing Director, Responsible Investment, Church of England Pensions Board, and Investor Co-Chair of ASCOR
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To see the research or for interviews with the authors, please contact Liam Collins on l.collins4@lse.ac.uk or gri.media@lse.ac.uk
Notes to editors
- The TPI Global Climate Transition Centre (TPI Centre) is an independent, authoritative source of research and data on the progress of corporate and sovereign entities in transitioning to a low-carbon economy. It is part of the Global School of Sustainability at the London School of Economics and Political Science (LSE).
- The TPI Centre is the academic partner of the Transition Pathway Initiative (TPI), a global initiative led by asset owners and supported by asset managers, aimed at helping investors assess companies’ preparedness for the transition to a low-carbon economy. More than 155 investors globally, representing approximately US$80 trillion combined Assets Under Management and Advice, have pledged support for TPI.1
- The TPI Centre is also the academic research expert of Assessing Sovereign Climate-related Opportunities and Risks (ASCOR).
- The report published today is part of the TPI Centre’s flagship trilogy. It complements the State of the Banking Transition 2026 report (October 2026) and will be followed by the State of the Corporate Transition in 2027.
- For more information, please visit https://www.transitionpathwayinitiative.org.
1 This figure is subject to market-price and foreign-exchange fluctuations and, as the sum of self-reported data by TPI supporters, may double-count some assets.