Carbon mitigation 2026 outlook: half-time report

At the end of 2025 we published our 2026 predictions for carbon policy, carbon markets and carbon capture, utilisation and storage (CCUS). As we near the mid-point of the year, we take stock, look back at our predictions from the end of last year and review the major moves that have validated or altered our perspectives, as well as unexpected developments encountered during the first half of the year.

In general, global climate momentum in the first half of 2026 has been uneven. Carbon policy has advanced diplomatically, with the phase-out of fossil fuels entering mainstream climate conversations and climate litigation gaining UN backing, yet many national leaders we predicted would step up have failed to do so amid geopolitical pressures. Carbon markets have also been afflicted by global instability, but compliance regimes and offset markets have also showed resilience, and regulatory developments around CBAM and Article 6 offer optimism for the future. CCUS exhibits a similar duality: project pipelines continue to grow and financing remains available for quality assets, but high-profile setbacks, policy inconsistency and macroeconomic shocks from the Middle East conflict create an uncertain outlook in both the short and long term.

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Carbon policy

At the close of last year we made five thematic predictions, three of which are broadly on track. The first is that April’s international conference co-hosted by Colombia and the Netherlands has placed reducing fossil fuels squarely into the global climate policy narrative. The summit in Santa Marta, Colombia convened a group of around 50 countries – including the EU, UK, Canada, Brazil and Nigeria – to begin work on how to reduce economic dependence on fossil fuels, with a second summit already planned for 2027 in Tuvalu. The second is that climate litigation received strong backing from the UN General Assembly, which overwhelmingly adopted a resolution in support of a landmark climate change ruling from the International Court of Justice stating countries have an obligation to protect the environment from the effects of greenhouse gas emissions.

On the other hand, we have seen mixed moves from countries we expected to emerge as new climate leaders. While Brazil and Colombia continued their strong end to 2025 – with Colombia emerging as an important moral and diplomatic voice pushing for more than multilateral incrementalism through its co-hosting of the Santa Marta summit – others on the list have yet to step up as expected. The UK’s position as a technocratic and climate finance leader is in danger of slipping, while the UAE’s exit from OPEC opens questions as to how it will balance planned increases in hydrocarbon production with its role as a strong influence in the Gulf’s climate transition direction. Further east, Australia and Singapore have yet to put their heads above the parapet to embellish their climate leadership credentials.

Much of this has to do with the impact of the Middle East conflict, as countries look to balance short-term economic costs with longer-term decarbonisation objectives. We therefore expect smaller nations such as Vanuatu and neighbouring Pacific Island nations that are the forefront of the physical impacts of climate change to drive climate leadership for the rest of the year more than larger nations that are busy navigating the complicated and mercurial geopolitical currents.

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