Carbon Tracker Initiative

In April 2026, Colombia and the Netherlands will bring together a “coalition of the willing” governments and partners in Santa Marta to advance a roadmap for transitioning away from fossil fuels. Carbon Tracker is contributing through the associated Global Science & Policy Conference, an academic convening immediately before the governmental conference that translates current research and ideas on transition pathways into roadmap options and evidence for the main intergovernmental discussions. 

The Santa Marta Process is intended to move the fossil fuel phase-out debate from general commitments to practical pathways which can inform an overall roadmap to phase out fossil fuels. It will focus on the real-world challenges: supply and demand, economic and fiscal vulnerabilities, the role of state-owned enterprises, pathways to diversify and decarbonise, the key enabling condition of finance. The process links political decision-making with expert and civil society inputs so that the roadmap reflects both climate objectives and economic realities. 

The Santa Marta conference in April is unprecedented – the first time that a strong group of countries have come together actively to discuss how to transition away from fossil fuels, to meet the goals of the Paris agreement to limit warming. This conference marks the start of an ongoing Santa Marta Process to progress real-world transition, with a second conference envisaged for later this year. The challenge of the transition raises important questions that sit with finance ministries, economic planners, regulators and investors: fiscal reliance on fossil revenues, balance-of-payments exposure, sovereign credit dynamics, and the enabling conditions required to mobilise investment at scale. The Santa Marta Process provides a collaborative forum to address these constraints directly and to test policy and financing approaches against real-world geo-political and economic conditions. 

Carbon Tracker is a co-convener of the Global Science & Policy Conference on Transitioning Away from Fossil Fuels hosted by the Universidad del Magdalena in Santa Marta on 24-25 April 2026. Carbon Tracker will work with universities and partner organisations to provide cutting-edge research and analysis that will inform the decisions governments and finance actors need to make. The purpose of this expert convening is to develop policy-relevant outputs – grounded in evidence – that can inform the roadmap discussions and strengthen the quality of the political decisions. 

Carbon Tracker works at the intersection of the energy transition and capital markets. Our contribution will focus on three areas: 

• Managed decline through a finance and economics lens – Analysis of how different fossil fuel phase-out pathways may affect sovereign credit, fiscal resilience and market pricing of transition risk, including implications for sovereign borrowing costs and access to investors’ capital. 
• Diversification and transition finance enabling conditions – Evidence on the policy and investment conditions that support diversification and mobilise capital to fund clean energy infrastructure at scale, with a focus on the questions typically led by finance ministries, economic planners and regulators. 
• Data and decision support – Scenario-based work (drawing on the Global Registry of Fossil Fuels as a policy tool) to help compare decline pathways. These scenarios are intended to demonstrate the implications of various routes to decabonisation and transition trade-offs, not to prescribe outcomes. 

The Science Pre-Conference convenes scholars, think tanks and practitioners across economics, political science, law, sociology and related disciplines. It includes outcome-focused workstreams: self-organised workshops designed to produce practical outputs which will feed into the inter-governmental conference proper. Workstreams include central banking, fossil methane, roadmap architecture, labour transition and regional economic diversification, economics and data, and state-owned enterprises, among others. Co-conveners are Universidad del Magdalena; University of British Columbia; University of Sussex; Hong Kong University of Science & Technology Guangzhou; Carbon Tracker Initiative; Climate Strategies; IISD; and LINGO. 

PetroStates of Decline: oil and gas producers face growing fiscal risks as the energy transition unfolds – fiscal exposure and sovereign risk
https://carbontracker.org/reports/petrostates-of-decline/ 

Switching to battery powered electric vehicles will save the Global South over $100 billion annually – demand-side disruption and oil demand implications
https://carbontracker.org/reports/electric-vehicles-in-the-global-south/ 

Tracking Emissions to Source – methodology underpinning the Global Registry of Fossil Fuels
https://carbontracker.org/reports/tracking-emissions-to-source/ 

Global Registry of Fossil Fuels – overview of the tool and how it is used
https://carbontracker.org/finally-we-have-a-global-registry-of-fossil-fuels/ 

For more information, contact the policy team financialpolicy@tracker-group.org  

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New report shows how closer alignment between scientific estimates and economic modeling of physical risks is possible, as world moves towards 2°C

London, 5 February 2026 – Economic models used by governments, central banks, and investors are increasingly understating physical climate risk because they rely on assumptions that break down as the world moves toward higher levels of warming, according to a new report from University of Exeter and Carbon Tracker published today. 

The report Recalibrating Climate Risk – drawing on expert judgment from more than 60 climate scientists – finds that many economic models are failing to capture the extreme events, compounding shocks, and rising uncertainty likely to dominate impacts in a hotter world.  

Jesse Abrams, lead author and Senior Impact Fellow at Green Futures Solutions, University of Exeter, said: “Our expert elicitation reveals a fundamental disconnect: climate scientists understand that beyond 2°C, we’re not dealing with manageable economic adjustments. The climate scientists we surveyed were unambiguous: current economic models systematically underestimate climate damages because they can’t capture what matters most – the cascading failures, threshold effects, and compounding shocks that define climate risk in a warmer world and could undermine the very foundations of economic growth.  

“For financial institutions and policymakers relying on these models, this isn’t a technical problem – it’s a fundamental misreading of the risks we face, which current models miss entirely because they assume the future will behave like the past, even as we push the climate system into uncharted territory.” 

The flaws in economic modelling have drawn attention in recent years, with influential models criticised by UK actuaries and scientists for understating climate impacts that many scientists now anticipate. Following the recent withdrawal of the ‘Economic Commitment of Climate Change’, the report sets out to close that gap – by establishing early consensus on how to best improve those estimates and calling for closer collaboration between climate scientists and economists. 

The result is an assessment that examines – in detail – how uncertainty is treated, how far GDP-based estimates remain meaningful, and what this means for financial regulators and investors as the world moves toward 2°C. 

• Climate damages are structural and compounding – not marginal. At higher levels of warming, climate impacts are increasingly likely to disrupt multiple sectors at once, as physical risks cascade across trade, finance, migration. These non-linear, structural impacts are likely to increasingly reshape entire economies and undermine the necessary conditions for economic growth. This undercuts against a core assumption in many economic models, which assume that economic growth continues indefinitely, merely at reduced rates. 
• Extremes, not averages, define the future of climate damages.  
• While economic modelling has traditionally linked damages to changes in global mean temperature, societies and markets experience climate change through local and regional extremes, such as heatwaves, floods and droughts, which drive the bulk of economic and financial disruption while often barely registering in global averages. 
• Similarly, experts find that gross domestic product (GDP) can mask full harms by failing to account for impacts on mortality and morbidity, inequality, ecosystem loss and social disruption – all factors that undermine societal, human and economic health. As these risks rise, continuing to rely on GDP-based assessments can give policymakers and financial institutions a false sense of resilience even as underlying vulnerability increases (e.g., recovery spending that spikes GDP after a climate-related disaster, masking welfare losses entirely). 
• Uncertainty rises sharply with warming. With temperatures trending towards a 2°C future, experts stress that impacts become increasingly unpredictable, as tipping points and tail risks increase. Even as models continue to produce precise-looking point estimates, climate risks will likely undermine the assumptions of continuous growth fundamental to many economic models. Policymakers should be wary of climate scenarios extending beyond certain temperature levels and take a ‘broad spectrum’ approach to tail risks. 

The report provides recommendations to financial regulators and central banks, to institutional investors and pension funds, and to financial advisors and scenario providers.  

• From a prudential perspective, the objective should not be to price climate risk with precision, but to ensure the financial system’s resilience against destabilising outcomes. This includes supervisory practices that place greater emphasis on extremes, compounding effects, tail risks, and systemic vulnerability. 
• For long-horizon investors, the report challenges the assumption that climate risk can be adequately measured through conventional financial metrics and managed through portfolio diversification approaches, warning that portfolios may appear resilient under standard macroeconomic indicators while experiencing rising exposure to physical disruption, correlated shocks, and systemic vulnerabilities. 
• For scenario providers and users, the report challenges the practice of presenting single “best-estimate” projections as a basis for policy planning, and warns that climate scenarios should support risk management under deep uncertainty, rather than optimisation around a single ‘best estimate’ trajectory. 

The report also introduces new approaches to improve damage modelling – reflecting expert judgement that beyond certain warming levels, economic modelling can appear precise while no longer describing real-world outcomes – and outlines a clear research agenda.  

It also stresses that the appropriate response is not to wait for perfect models – but to recalibrate governance toward precaution, robustness, and transparency. 

Mark Campanale, Founder and CEO, Carbon Tracker Initiative: “The net result of flawed economic advice is widespread complacency amongst investors and policy makers, with many investors viewing climate scenario analysis as a tick-box disclosure exercise. Until the gap between scientists and economists’ expectations of future climate damages is closed and Government bodies act to ensure the integrity of advice upon which investment decisions are made, financial institutions will continue to chronically under-price climate risks – meaning that pension funds and taxpayers will remain dangerously exposed.” 

Laurie Laybourn, Executive Director of Strategic Climate Risks Initiative and Board Member, Carbon Tracker Initiative: “As the UK government’s landmark security assessment of ecosystem collapse showed last week, we are currently living through a paradigm shift in the speed, scale, and severity of risks driven by the climate-nature crisis. Yet, beyond this report, there has not been a corresponding paradigm shift in how regulators and government as a whole assess these risks. Instead, they’re routinely underestimated if not missed entirely, meaning many regulations and government action are dangerously out of touch with reality. This threatens disaster when that reality catches up with us. So, it’s critical that policymakers change course, providing clear signals and guidance to markets that these risks should be priced accordingly, rather than downplayed.”  

Hetal Patel, Head of Sustainable Investment Research at Phoenix Group said:  

“Phoenix supports the report’s call for a more robust and co-ordinated approach to climate‑risk modelling. Underestimating physical risk doesn’t just distort financial analysis and investment decisions, it underplays the real‑world consequences that will ultimately affect customer outcomes and society as a whole. As one of the UK’s largest asset owners, we urge policymakers to act decisively on the systemic risks identified in this research and to set clear expectations for financial sector users” 

ENDS 

Contacts 

Ben Dickenson Bampton, Communications Lead, Green Futures Solutions – University of Exeter 

Tel: 07840194274 

Email: b.dickenson-bampton@exeter.ac.uk 

Joel Benjamin, Communications Manager, Carbon Tracker Initiative 

Tel: 07429637423 

Email: joel.benjamin@carbontracker.org  

Notes to Editors 

The Recalibrating Climate Risk report was led by the University of Exeter’s Green Futures Solutions team, in partnership with Carbon Tracker Initiative and funding from the Aurora Trust. The report was authored by Dr Jesse F Abrams (lead author), Dr Sam Xiaocheng Hu, and Ben Dickenson Bampton. 

The report synthesises expert judgement from 68 climate scientists, who were consulted through a combination of survey and workshop approaches. Together, they represent universities, research institutions, and government agencies from 12 counties (USA, UK, Germany, Australia, France, China, Netherlands, Spain, Norway, Canada, Austria and Sweden). As standard for expert elicitation exercises, the results were collected anonymously. 

The full report will publish here: https://greenfuturessolutions.com/news/recalibrating-climate-risk/ 

About the University of Exeter 

The University of Exeter is home to over 1,500 climate and environmental experts (including many of the world’s most influential climate scientists), over 30 specialist institutes, and world-leading initiatives – such as Global Tipping Points Report and Global Carbon Budget. Through Green Futures Solutions, we help organisations access this expertise and navigate their exposure to climate risks, develop resilient solutions, and drive transformative change in their sector. Each year, we partner with a wide range of organisations – including the National Trust, Met Office and – to deliver collaborative reports, consultancy, and informed solutions for a sustainable future. Learn more about our work here. 

About Carbon Tracker Initiative 

The Carbon Tracker Initiative is a not-for-profit financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality. Our research on the carbon bubble, unburnable carbon, and stranded assets has begun a new debate on aligning the financial system with the energy transition to a low-carbon future. www.carbontracker.org 

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