Carbon Tracker Initiative

The Climate Project After 1.5°C

Harry Benham — Sun, 25 Oct 2026 15:23:53 +0000

How to build the integrated plan we never had

The UN officially noted in September 2026 that “exceedance of the 1.5°C global warming target is unavoidable” and we are now in era of overshoot and managing its consequences.

In some ways this was inevitable, as we had no detailed plan to achieve the target.

But we’ve started at the end of this part of the story.

So let’s back up ten years to COP 21 in Paris 2015, where the warming target was agreed amongst almost all the countries in the world.

Now, any serious multi-billion-dollar project normally has an objective, design, costs and schedules and controls. Even a house extension has these basics in place before a brick is laid, or money spent.

So Paris gave us the objective. But the rest could not yet be specified – no formal “design”, no working overall cost and schedule toward the objective, and little in the way of formal project controls.

But ten years of execution have now produced enough evidence to construct a working integrated plan, even if the original 1.5°C stretch pathway without material overshoot has been lost

The Climate Project Baseline Emerges

By a baseline I mean the current working project plan against which actual progress is measured: the objective, design, major milestones, cost estimates and critical dependencies such as technology developments.

What it is not – It is not a prediction of what might happen in various scenarios, and it is not a model to get us to a temperature destination eg 2 or 2.7°C.

What it is is the baseline plan we manage against until evidence requires a controlled change.

For the climate project, the objective baseline remains Paris.

The climate effort had fragmented baseline elements — the Paris goals, country plans (Nationally Determined Contributions, NDCs), analytical pathways, scenarios, milestones,— but no single integrated delivery baseline.

So a key act now is to simultaneously reconcile those original commitments and attempt the first integrated working baseline.

In project language –

The objective baseline — held (Paris, < 2°C)
The delivery baseline — developing and needing project controls

The Paris Agreement has in effect created a climate mega-project, but an odd one.

Take the climate “mega-project” compared to conventional project delivery systems:

Set a completion criterion (2°C, stretch 1.5°C)

→ Began executing thousands of uncoordinated work packages (solar, wind, CCS, nuclear, hydrogen, batteries, EVs, geo-thermal, low-carbon fuels…)

→ Discover the effective / ineffective design through deployment

→ And now – perhaps – gather enough information to contemplate an integrated design basis.

Most project plans would start with a clear design, and then the detailed engineering plans first and work to execute and construct them: this one executes various engineering concepts and then discovers the grand design and plan in retrospect.

This is not unknown – large IT projects, even the internet can be described this way.

But so far this activity still does not offer a design concept for the climate project, and how well we are doing in delivering it.

No agreed answer yet to how the temperature control outcome is produced: is it through solar and wind, through nuclear, through carbon capture, through behaviour change and efficiency, through some combination of these or a technology X not yet specified?

And it still has no explicit cost and schedule, beyond various estimates, scenarios and outlooks.

It also has no project organisation with the authority to own project progress, costs and milestones, check against them and hold anyone to account.

In project terms, Paris set an objective without constituting an integrated plan.

This is not a criticism of the early diplomatic and analytical efforts.

But it is a description of the climate project delivery problem.

When the key project objective requires cooperation between nearly two hundred sovereign states, each with its own politics, its own capital constraints and its own veto, you do not get a project schedule.

You at best get an accord.

That is what was achievable.

But an accord is not a plan: the problem is though, by having an explicit project objective that is well publicised, we have spent a decade treating it as one.

The consequence is now visible.

We have almost certainly breached the stretch target of 1.5°C.

Emissions are not falling fast enough, if at all, although it is likely a high-level plateau has been achieved. And this acts also as a major project signal, as it links closely to the objective.

There is a robust near-linear relationship between cumulative CO₂ emissions and warming, allowing a solid carbon budget to be estimated: in 2018 we calculated we had about 580 billion tonnes of CO2 we could emit and stay below 1.5degC, with a 50% chance.

In project terms that is known as a contingency – in normal projects this is usually expressed as the amount of money or time we have added to the plan estimate – as a buffer against events and errors. We used carbon emitted as a best alternative measure.

By early 2026 we had used up all but around170 billion tonnes of this carbon contingency, meaning that at our current rate of emissions, 42 billion tonnes per year (5 tonnes per human), we have about four years left before it is all gone, end 2029.

So – breaching the stretch target should be no surprise.

We had the clear warning signal for over a decade.

In that sense the temperature violation is a lagging project indicator – it confirms what we expected.

Emissions are more a current variable – telling us today what the status is.

And deployment of technologies or policies against a plan to reduce them are leading indicators – suggesting what should now be prioritised or reprioritised.

In sum – we need to re-baseline the project – we need to create a new plan.

Meanwhile, the energy transition carries on

And yet. Here is the thing.

In lock-step with the climate objectives is an underlying energy transition: staying with fossil fuel combustion which creates CO2 as waste and pollution, would leave us fully exposed to the volatilities of unchecked global temperature rise.

Hence the pivot over the past few decades to alternatives: zero or low-carbon energy sources as a substitute, to lower climate risk as fast as possible.

And here there is a better story – the energy transition on several major fronts is accelerating, some even ahead of “plan” or expectations at least — solar power, wind power, large scale storage batteries, electric vehicles and other electrification industries are becoming an economically preferred system, not merely an environmentally desirable one.

In project parlance, whilst the emissions / temperature levels are a negative variance to plan (ie behind expectations) wind, solar, batteries and electrotech such as EVs, are a positive variance to plan (ie doing better than imagined).

Both things (temperature target breached with emissions at a high plateau, but new technologies arriving more quickly) can be true at once.

The contradiction is not a failure of the original idea.

It is what happens when a project runs without an integrated project plan or dedicated programme control function.

The red signal of emissions persisting should have caused a resultant activity in the plan to address the negative variation: a shift in capital allocation, or a prioritisation of effective technologies the key examples.

The Climate Project Re-baseline

The useful move now is not to abandon the target climate objective, but also not to pretend it is still on schedule.

It is to do what any competent project does when reality overtakes the original plan:

– recognise the reality,

– preserve the objective,

– change the execution plan using new knowledge gained in the project

A re-baseline, in project phrasing.

But a re-baseline is legitimate only if it records rather than conceals the original variance.

The original objective remains visible; assumptions are changed because reality has changed.

Otherwise re-baselining is simply moving the goalposts.

A re-baseline is not an admission of failure. It is a normal, disciplined project act.

Every large programme does it, usually more than once.

Recognise reality.

The original baseline has moved. 1.5°C is no longer the planning case; the new planning case is overshoot.

And overshoot is no longer a scenario, it is the observed trajectory.

Recognition means writing down what has actually happened, not what we hoped would happen.

Much climate reporting still measures progress against the old plan as though nothing has changed — announcing record solar additions in the same breath as record emissions, without reconciling the two.

Many scenarios still record emissions targets for 1.5degC that involve almost impossible technical deployments aligned with a sudden collective policy consensus.

That is not a realistic plan being executed.

It is a disconnected series of desired outcomes.

Second, preserve the objective. This is where a re-baseline differs from abandonment.

The goal — limiting warming, minimising peak temperature, shortening the duration of overshoot — remains and is expressed in the UN report.

Every tenth of a degree still matters, and every single year spent above 1.5°C still adds major long-term risk.

What changes is not the destination.

What changes is the route and the pace required to reach it.

Third, change the execution plan and unearth the critical path. This is the part almost nobody is doing.

Without an integrated plan, the climate project has no “critical path”.

The critical path of any major project is a sequence of critical tasks – if any task on this path is delayed by even one day, the final completion date of the whole project slips by one day too.

An integrated plan needs to make that critical path clear and transparent.

While we have likely missed the original stretch target, we have still learned an enormous amount via the active pursuit of it.

If the old plan assumed a certain mix of technologies would deploy at a certain speed, and they have not, then the plan should be rewritten — not the target.

If solar and batteries have outperformed while grids and permitting have underperformed, then capital, policy attention and institutional effort must move accordingly.

That is what a re-baseline does: it learns from project actions – and then reallocates scarce resources against the actual critical path such as electric grids – not the one assumed previously such as renewable supply capacity.

In that example – if we are ahead on renewable capacity an integrated plan reallocates spare capital to the grid.

Conversely, with no integrated plan the climate project cannot see its critical path – it is guessing what is on it. Perhaps spending excess capital on solar deployment when grid capacity would better retain the cost and schedule.

And it is rare that an integrated plan retains “all of the above” for energy technologies and policies and generates multiple often contradictory scenarios. It is forced to select among them to keep to cost and schedule.

But we know the Climate Project is an odd one – so as we analyse it we should expect no single stable critical path: it is likely to move round at global and country level,

China may have a very different critical path eg less EV / electrotech investment vs more coal retirement compared to the path for the EU or US – where investment in electrotech remains behind plan.

Project Controls and the Design Concept

If the climate project can never have a project manager, it can still have project controls.

Absent a project manager it can still determine a baseline, a critical path (or paths) and a cost and schedule to monitor progress.

A project manager holds executive authority.

But – project controls hold the baseline, measure variance, and report what is actually happening — without owning the work.

In a normal project programme the two – Project Manager and Projects Control Lead – sit together.

In the not-so-normal climate project, only the second, integrated project controls function, is available. But it may be enough.

The project control function asks fundamental questions, constantly:

It asks:

What was the plan?
What is the dominant design concept?
Where are we now?
What are the key critical paths and what is now on them globally and by country
What changed in the past 6 months?
What is late?
What is outperforming?
What has become implausible?
What corrective action follows?

It communicates the answers against the original and new baseline — for example the NDCs, the 2030 and 2035 milestones, the Net Zero dates — and lets the gaps speak for themselves.

This is deliberately unromantic work.

It does not advocate for solar over nuclear, or mitigation over adaptation, or ambition over realism.

It also has to deal with the fact that a single “design concept” is likely only going to be delivered or conceived in retrospect – eg “we achieved the climate target via the combination of ….”

It simply holds the best overall plan we have against reality and reports the delta.

That is precisely what makes it useful.

Climate debate under a target missed, under stress, seems to bifurcate into two positions (this is a rough summary, but it does condense a lot of latest commentary):

1.5°C is still achievable, keep saying it,

1.5°C has gone, pivot to adaptation.

Either way – both are more political, not project-based positions.

And neither answers the delivery question.

A project controls function dissolves the binary by refusing to take either side, and instead produces a more objective assessment: here is where the project actually stands against its baseline.

Three things make this function credible.

Independence — it cannot sit inside a negotiating body, or it becomes a party.

Evidence — it works from hard data, not relying on scenarios, and reports against physical progress measures: gigawatts connected, gigawatts approved – not gigawatts in a given scenario.

Consistency — it uses the same baseline every time, so that variance is measurable across time. Without that consistency, re-baselining becomes a habit of moving the goalposts. With it, it becomes a discipline.

None of this requires global governance reform, a new treaty, or anyone’s permission.

It requires a competent institution or globally agreed framework willing to hold the baseline and publish the differences —in public, and without advocating for anyone’s preferred outcome.

We’ll discuss this in more detail in Part 2

Writing the Plan We Couldn’t Write in 2015

There is a forgiveness that has to be said out loud.

We set the climate objective before we knew the design to deliver it; but pursuing the objective helped us discover it.

In 2015, the plan could not have been written. Not by diplomats, not by engineers, likely not by anyone.

The technologies were too immature to select.

The costs were unknowable.

The learning rates did not exist yet, because the deployment had not yet happened.

Asking the world to produce a design concept, a cost estimate and a schedule for “avoiding dangerous warming” was asking for something no institution on earth could have delivered.

What was achievable was a target.

That is what we got.

It was not a failure of will. It was a condition then of the world.

A decade later, the condition of the world has changed. Its knowledge and its climate situation have altered.

A design concept has started to emerge – and now we can perhaps create a continuing design that we can better define, allowing better execution.

The design was not declared at a conference, or frozen via internal expert analysis.

It was selected somewhat in the wild by cost curves and manufacturing scale.

Solar, wind, batteries, electric vehicles, electrification – not because anyone declared them the winner, but because repeated deployment has increasingly demonstrated their efficiency, economics and scalability

That is not the standard concept selection process. But it is likely the climate project will never look like a standard phased project from concept to operation.

A schedule has emerged too.

Peak emissions. Peak coal. Peak oil demand.

These are climate plan milestones whether anyone calls them that.

They sit in the data, in the global technical reviews, in the observed trend lines.

A schedule is simply a sequence of dates against which progress can be measured.

Ten years of deployment bought us the numbers that ten years of negotiation could not. The cost we could not devise in 2015 is more priceable now.

This is the odd shape of the climate project.

It was a de facto networked programme in which the design is still being discovered during execution rather than fixed before sanction.

That inversion is why it has always felt unmanageable.

It is not that the world failed to plan. It is that the plan could only be written after the attempt had started.

Which means the first task of project control is not to impose a plan.

It is to notice the one that has quietly begun assembling itself, so now hold it against the original objective, and write it down.

Deriving the climate project concept, cost and schedule retrospectively after creating its ultimate target is not just tidying up.

It is the act that converts a target into something that can be delivered, measured, and corrected.

Then governance remains the genuine gap.

We could not write this plan in 2015. We can draft it now.

The megaproject disciplines reveal what the climate effort is missing.

The analogy does not tell us that climate can be managed like a project.

It tells us which project disciplines now become valuable.

Coda, and Part 2

In Part 2 we change gears and propose a practical Action Plan.

And our plan will not start with primary energy consumed, but with the useful energy services delivered, and work backwards.

That is what we have learned.

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Can a Sweltering Summer Create an Autumn of Opportunity for the Transition?

Richard Folland — Tue, 06 Oct 2026 16:04:28 +0000

Recent months have reinforced the case for accelerating action on the energy transition and climate, particularly from a European perspective.

Let’s list the reasons why:

this summer has been like no other in Europe, with five major heatwaves across the continent and provisional data from the UK Met Office showing temperatures in London approximately 4°C above the long-term baseline average (1991-2020);
internationally, 2026 has been marked by a series of extreme weather events, from the tragic landslide in Nepal caused by a melting glacier to a deadly winter storm bringing widespread fatalities across North America;
all this against the backdrop of a super El Niño likely to generate even more extreme weather across the globe in the coming months;
growing recognition, reflected in UK Energy Security and Net Zero Secretary of State Miatta Fahnbulleh’s warning that the war in Iran and closure of the Strait of Hormuz have shown how exposure to global fossil fuel markets raises energy costs;
the war has also led to an explosion in electric vehicle sales, particularly in Asia. Across the first half of 2026, electric car sales in Europe grew around 35-40% compared with the same period in 2025; in the UK it’s up about 25% over the same period;
according to WindEurope, Europe installed 8.8GW in the first half of 2026, a 30% increase on H1 2025. Renewables provided 53.1% of electricity generated by the UK’s Major Power Producers between March and May, with renewable generation up 22% year on year.;
a breakthrough on the costs of energy storage, with global benchmark costs for four-hour battery storage projects falling by 27% year-on-year in 2025.

On the face of it, the case for accelerating the transition has never been stronger. But despite this, the state of multilateral action on climate change can probably be summed up by the collective shrug in response to the Climate Summit convened by the outgoing UN Secretary-General in New York on 23 September. In his final UNGA week, Antonio Guterres again argued that fossil fuel expansion “defies science, economics and common sense”. In language reflecting an increasing sense of alarm and urgency, he talked about this being the last generation “who can avert climate catastrophe”.

The weakened state of climate multilateralism is often attributed to a geopolitical environment in which political consensus has fractured and climate science is more openly challenged. This is evident not only in North America but in several European countries. But are there still opportunities this autumn for the pendulum to swing back towards concerted policy action that reflects the favourable platform that science, technology and economics are providing?

All roads on climate tend to lead to the COP, which this year will meet in Antalya, Turkey, from 9-20 November. COP31 will feature an unusual co-hosting arrangement between Turkey and Australia, alongside a pre-COP meeting hosted by Fiji and Tuvalu from 5-8 October. Crucially, the Pacific gathering will give small island states a platform to highlight the existential threat posed by climate change.

As for COP31 itself, the co-hosts face the challenge of providing a central focus for a COP where no single major negotiated decision is expected and which is being described as an “implementation COP”. But two key themes are emerging:

a “35 by 35” global electrification target, designed to accelerate the transition by increasing the share of global final energy demand met by electricity to 35% by 2035, up from the present 20%;
ecosystem resilience, and the impact of severe climate shocks on food and water systems.

Serious discussion of both issues will be welcome. Yet many increasingly view the COP process, and the wider UN system, as unable to move beyond being a talking shop. Which is why, perhaps even more than is usual at a COP, some of the more consequential action in Antalya may take place in the margins outside the formal negotiations.

This would be consistent with the most significant outcomes from COP30 in Belém, with the emergence of two separate “coalitions of the willing” to work on international roadmaps: to transition away from fossil fuels (TAFF); and to halt and reverse global deforestation.

This TAFF initiative in particular will be put to the test of COP politics, even if it’s not on the formal agenda. Twelve months on from its birth in Belém, and seven months since the coalition of nearly 60 countries met in Santa Marta, Colombia, to kickstart work on a global TAFF process, there will be pressure to start turning high-level ambitions into concrete plans. This will mean attention on the Netherlands, which co-hosted Santa Marta with a Colombian government that has since been replaced by a new administration not committed to the initiative, and Ireland and Tuvalu, which will host a “Santa Marta 2.0” in the Pacific next July. These governments will want to show whether their initiative can work alongside the COP process and even restore some faith in the value of international cooperation to tackle global challenges. Other members of the coalition may also face questions about whether their domestic policies match their claims to international leadership: from the UK Government, which will also take on the G20 presidency in 2027, to Canadian and Australia governments, where fossil fuel production policy is moving in a different direction.

Looking beyond COP31, there are still grounds for optimism, whether through existing institutions or coalitions such as TAFF. The possibility, if recent reports are to be believed, that China could host COP33 in 2029 could be a game-changer, another Paris moment for the UNFCCC and multilateralism to demonstrate that it can deliver more than rhetoric. But back in the present, the science is making clear that delaying meaningful action, even now, will only do further harm. As the Belém Declaration on a TAFF spelled out nearly 12 months ago, action needs to be accelerated.

As progressives gather in Antalya, they may therefore do well to keep two overarching priorities at top of mind.

First, revisit the Belém Declaration as a constant reminder that limiting global temperature rises requires a “shared determination to work collectively towards a just, orderly and equitable transition away from fossil fuels”. This work will require, as the Declaration detailed, a focus on economic diversification, reducing structural dependence on fossil fuel revenues and phasing out inefficient fossil fuel subsidies. Progressive policymakers will also need to consider how to support a step-change in finance for the Global South, given the vulnerability of many emerging and developing economies to both the transition and the physical impacts of climate change. The work that has begun since the Santa Marta conference – both in the Santa Marta workplan and the separate but closely linked Brazilian COP Presidency TAFF exercise – will give policymakers the tools to start implementing TAFF in practice. That collective effort can begin in the discussions in and around COP31, even if not yet in the formal negotiations.

Second, one of the most positive developments this year has been the reframing of climate around energy security, risk and resilience. The statement by the UK Prime Minister at the same UNGA week where the UN Secretary-General’s Climate Summit yielded little tangible progress, that “the climate crisis is now a national security threat for countries around the world”, is a sign of an evolving narrative. As is this line from the recent Green Central Banking newsletter: “maybe resilience, for lack of a better word, is a new, pragmatic way to ensure climate action and collaboration still take place in an ever more geopolitically fragmented world.”

COP delegates will also be mindful that they are convening just after the US mid-terms on 3 November.

Many of the underlying conditions (economic, technological and scientific) are in place for governments to make this autumn one of significant progress on climate ambition. The case for framing the transition around economic opportunity and 21st-century energy security is clear. Policymakers may remain cautious in the current geopolitical environment; but this is time to seize the moment.

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NYCW 2026: AI Data Center Roundtable

Hannah Besly — Tue, 15 Sep 2026 15:24:16 +0000

24 September | New York

A strategy discussion at New York Climate Week 2026, bringing together frontline actors fighting data centers in communities and the policy advocates fighting for guardrails to prevent their economic, social, and climate harms. In this time of relentless attacks on people and planet, our strength is our aligned action. Just as the carbon bubble analysis equipped a generation of climate activists, bringing together community, economic, and political AI expertise can strengthen the fight on the ground.

If interested in attending, please contact events@carbontracker.org

SPEAKERS & TOPICS

The AI bubble could burst — and take the economy with it
- Matthew Scherer, Open Markets Institute
Federal principles for data centers and AI governance
- Clara Vondrich and J.B. Branch, Public Citizen
The Investor Dilemma
- Danielle Fugere, As You Sow
How communities are stopping data centers
- Abre’ Conner, NAACP
Private equity financing of data centers
- Ashlee Thomas, Private Equity Stakeholder Project
Big Tech: now Big Oil’s #1 Accomplice
- Holly Alpine, Embedded Emissions
Data Centers and Democracy
- Saul Levin, Hum podcast

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NYCW 2026: Fossil Free Zones Breakfast

Hannah Besly — Tue, 15 Sep 2026 15:19:24 +0000

24 September | New York

A breakfast strategy session at New York Climate Week 2026, aligning Amazon, Congo Basin and Coral Triangle strategies ahead of COP31. The aim: moving Fossil Free Zones from community-led demands into formalised, low-cost policy tools that governments can integrate into national energy transition and deforestation roadmaps.

PROGRAMME & SPEAKERS

If interested in attending, please contact events@carbontracker.org

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NYCW 2026: Season of Creation

Hannah Besly — Tue, 15 Sep 2026 15:14:36 +0000

24 September | New York

What can we celebrate? What can we challenge?

A Laudato Si’ and Carbon Tracker panel at Climate Week NYC 2026. With overshoot of 1.5°C now called unavoidable and a stable climate recognised as a legal obligation, we ask what the Season of Creation gives us to celebrate, what it demands we challenge, and whether honest realism or optimism better serves the fight ahead.

If interested in attending, please contact events@carbontracker.org

THEMES FOR DISCUSSION

Limiting overshoot
- UNEP’s September 2026 report: at least 1.8°C even in the most optimistic future. “There are no good
  outcomes above 1.5°C.”
A stable climate as a human right
- The ICJ advisory opinion of July 2025, endorsed by the UN General Assembly 141–8 in May 2026,
  with the COP31 host among the abstentions.
A decade of COPs without “fossil fuels”
- From Paris to COP30, outcomes that consistently omitted the phrase, and the Santa Marta coalition of
  the willing formed in response.
The growing cost of delay
- Over 35,000 excess deaths across Europe in the summer 2026 heatwaves; seven of nine planetary
  boundaries already exceeded.
Optimism or realism?
- “What if we stop pretending?” against communities that rise to the occasion, and Laudato Si’s reminder
  that the cry of the Earth is the cry of the poor.

SPEAKERS

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Trucking’s Tipping Point: Are Markets Underpricing the Electric-Truck Transition?

Hannah Besly — Wed, 09 Sep 2026 16:39:53 +0000

29 September | Online

Join Carbon Tracker and Transport & Environment, with guest panellists from the investor and sector community, for a 60-minute briefing on Carbon Tracker’s recently published report Trucking’s Tipping Point and an Investor Statement on zero emission freight. Drawing on the University of Exeter’s FTT model and Carbon Tracker’s market and asset data, the session sets out why heavy-truck electrification is becoming an economic rather than a regulatory decision, what that means for transition risk in the sector, and how exposed European incumbents are to faster-scaling Chinese competitors.

It will also introduce the Investor Statement on zero emission freight, coordinated by Transport & Environment, in the context of the current EU CO₂ standards review. For investors, this raises a pointed question: are automotive and industrials portfolios carrying transition risk that isn’t yet being priced in?

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New York Climate Week 2026

Hannah Besly — Fri, 04 Sep 2026 10:10:34 +0000

Thursday, 24 September | New York

Carbon Tracker is taking part in a series of discussions at New York Climate Week, bringing an investor perspective to key questions shaping the energy transition

AI, climate and corporate accountability
Carbon Tracker is co-hosting a roundtable with As You Sow and Public Citizen exploring the economic, social and climate implications of AI and data centre development. The discussion will bring together investors, policy advocates and communities working to address the impacts of data centres, including questions around financing, corporate power and the potential risks of an AI bubble.
Climate and the energy transition
Carbon Tracker will join the Laudato Si’ Movement for a discussion on climate and the energy transition, including the Santa Marta fossil fuel phase-out. The session will explore how finance, policy and investment can support a shift away from fossil fuels, as well as the barriers that remain to accelerating the transition.
Fossil Free Zones
Together with Earth Insight, Carbon Tracker will convene philanthropic partners and civil society leaders from across the Amazon, Congo Basin and Coral Triangle to examine how Fossil Free Zones could support national energy transition and deforestation strategies ahead of COP31. The session will explore how the introduction of zones to protect key ecosystems from fossil fuel development can become a practical tool for national energy transition and deforestation strategies ahead of COP31.

If interested in attending, please contact events@carbontracker.org

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Heavy-duty truck market set for faster-than-expected shift to electrification

Hannah Besly — Thu, 27 Aug 2026 09:42:41 +0000

New analysis shows the sector is approaching a commercial tipping point in the early 2030s that will trigger a rapid shift to battery-electric trucks and reshape competition across the global truck market.

London, 27th August – Heavy-duty transport has long been viewed as one of the most difficult sectors to electrify. Carbon Tracker’s new report, Trucking’s Tipping Point, shows that electric trucks are expected to become economically competitive with diesel across major markets in the early 2030s, overturning the long-held assumption that the sector will be slow to electrify. The analysis demonstrates that China’s rapid freight electrification is poised for swift global export. Equity analysts must urgently reflect this accelerating transition in truckmaker valuations, while portfolio managers should adjust their investment decisions before market re-pricing takes hold.

Drawing on the University of Exeter’s Future Technology Transformations (FTT) model, Carbon Tracker applies an investor-focused analytical framework to assess transition risks and opportunities in the commercial vehicle sector. Calibrated with Carbon Tracker’s proprietary market and asset data, the analysis identifies when commercial tipping points are expected to be reached across major markets and which manufacturers are best positioned for the transition.

Commercial fleet purchasing is ultimately an economic decision driven by total cost of ownership (TCO). The analysis shows that falling battery costs and manufacturing scale are bringing electric trucks towards cost parity with diesel. Once that threshold is reached, adoption is expected to accelerate rapidly across major markets.

For investors, the key risk is not simply when electric trucks overtake diesel in new sales, but how quickly adoption accelerates once commercial tipping points are reached. Faster transition speeds could lead to and then accelerate the write-down of legacy internal combustion manufacturing assets, while rewarding manufacturers that are better prepared for an increasingly electric market.

Ben Scott, Head of Energy Supply at Carbon Tracker said: “Heavy-duty trucking has long been regarded as one of the hardest transport sectors to electrify. While important barriers remain, including charging infrastructure, our analysis shows that improving total cost of ownership will dictate the speed of the trucking EV transition. Investors should not underestimate how quickly adoption could accelerate once those commercial tipping points are reached and should be asking whether manufacturers have credible strategies to compete in an increasingly electric market.”

The report recommends investors:

Stress-test automotive investments against dynamic cost-parity scenarios, rather than relying solely on static regulatory forecasts, to better assess the speed of the transition and the risk of legacy internal combustion assets losing value.
Use active stewardship to challenge incumbent truck manufacturers on their electrification strategies, including how they plan to scale electric platforms, strengthen supply chains and remain competitive as the market transitions.

– ENDS –

Notes to editors
For more information and to arrange interviews please contact:

Alessandra Moscadelli – alessandra.moscadelli@tracker-group.org

Sally Palmer – sally.palmer@tracker-group.org

About Carbon Tracker
Carbon Tracker is an independent financial think tank working to align capital markets with an accelerated energy transition. Through data-driven research, we assess the risks associated with continued fossil fuel investment and opportunities arising from changes in energy demand, technology and climate policy. Our work empowers investors, policymakers and companies to make informed decisions that support an orderly shift to a net zero emissions future.

www.carbontracker.org

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What energy world is Canada betting on?

Olivia Bisel — Fri, 21 Aug 2026 13:30:58 +0000

Ottawa’s August announcement of its intention to fast-track the West Coast pipeline proposal marks the latest in a series of interventions designed to facilitate oil and gas expansion in Canada. Paired with its recent push for major pension funds to invest in new oil and gas infrastructure, the establishment of the Canada Strong Fund, and other measures, Canada’s federal government is elevating oil and gas expansion as a nation-building endeavour. More than winning residual demand for oil and gas, the country appears to be betting on demand growth in key Asian markets, encouraged by extraordinary market conditions today.

Yet, a fundamental question remains: is oil and gas expansion in the best interest of financial stakeholders? Beneath rhetoric of energy exceptionalism and oil and gas demand growth, the numbers tell a different story.

The same energy crisis that makes Canadian supply look attractive today risks accelerating a market shift away from fossil fuel imports.

Through a short-term lens, oil and gas expansion in Canada may appear lucrative. With the closure of the Strait of Hormuz, producers operating outside of the Persian Gulf are reaping steep windfalls as global supply tightens. However, the fundamentals of new projects fall short in the face of long-term headwinds.

Oil and gas expansion requires significant upfront capital expenditure to be economically viable, supported by sufficient market demand and prices decades from now. The oil and gas growth narrative in Canada assumes Asian markets, in particular, will absorb long-term export growth.

The accelerating rollout of cheaper and more secure alternatives to oil and gas imports turns this assumption on its head. Asia is electrifying five times faster than the West, while ramping up renewable energy capacity faster than the rest of the world (see Figure 1)[1] – undermining demand for oil and gas in the process. Globally, a range of energy scenarios see demand for oil and gas peaking by 2030 and the mid-2030s, respectively. Reflecting this, investment in clean energy systems already roughly doubles that in fossil fuels.[2] The rise of consolidation among oil and gas majors globally suggests many companies are waking up to the immense transformation of the energy system underway.[3]

Figure 1: Asia is running ahead of the rest of the world on electrotech.

Source: Ember (2026)

Crucially, the current Middle East conflict — while increasing the relative attractiveness of Canadian producers today – may undercut the long-term market demand for Canadian hydrocarbons.

Geopolitical tensions appear to be accelerating Asia’s rapid electrification and renewables buildout, as price-sensitive consumers, businesses, and policymakers confront energy affordability and availability challenges stemming from the region’s high dependence on fossil fuel imports. Across Asia, the doubling of China’s solar PV exports in March 2026, the cancellation of certain LNG-related projects, the fast-tracking of renewable and electricity storage systems, and the restarting of nuclear reactors illustrate this shift.[4]

For LNG specifically, a wave of new projects further threatens to compress prices – compounding the energy transition risk of oil and gas demand destruction. With ~254 million tonnes of LNG expected to come online by 2030, futures markets are seeing LNG prices of $10/MMBtu and below as soon as 2028.[5] At this price, our analysis suggests under-construction and proposed LNG projects in Canada may fail to compete. Simultaneously, LNG price volatility is likely to deter importers from sinking significant capex into regasification infrastructure.

Market uncertainty in coming decades casts doubt on the value-add of potential new oil and gas projects in Canada…

Structural market uncertainty matters to companies and their investors. Investment decisions made today lock oil and gas companies – and their financiers – into projects whose economics depend largely on oil and gas prices decades into the future. Findings from CTI’s Fading Fortunes suggest the extent of this exposure varies: certain Canadian producers face relatively greater risk of value destruction from new projects than others, depending on how cost-competitive their project portfolios are.

Figure 2 summarises the impact of different investment strategies on the upstream oil and gas value of 10 of Canada’s largest producers. The analysis assesses whether investment in new projects adds or destroys value by comparing two growth investment cases against a Depletion case in which no new projects are developed. The “High” investment case (red) reflects business-as-usual “BAU” investment in new projects; the “Managed” investment case (orange) restricts new investment to lower-cost options.

The analysis tests these investment cases under a fast, moderate, and slow transition scenario. The commodity prices tied to these scenarios – while lower than the elevated prices of the 2026 energy crisis – reflect potential long-term prices in the 2030s as markets normalise and oil and gas demand substitution continues.

Figure 2: NPV impact of High and Managed investment relative to Depletion, by Canadian O&G companies under a range of commodity price scenarios.

Sources: Rystad Energy, CTI analysis

Across these 10 companies, downside risk exposure under a fast transition scenario is approximately double the upside potential under a slow transition scenario. Downside risk exposure is particularly pronounced for companies reliant on new gas projects to drive future production.

…yet, financial stakeholders are making long-duration capital bets based on market conditions today.

Canada is continuing to commit capital to assets with multi-decade lives, based on expectations of Asian demand growth for oil and gas imports – precisely as Asia expands clean and homegrown alternatives. Capital decisions are being made based on the extraordinary oil and gas market of 2026, when the financed infrastructure must withstand markets that may look very different through the 2030s and 2040s.

An examination of Canada’s banking system illustrates how this bet is being financed. Canada’s Big Five banks (comprising Royal Bank of Canada “RBC”, Toronto-Dominion Bank “TD”, Canadian Imperial Bank of Commerce “CIBC”, Bank of Montreal “BMO”, and Scotiabank) remain among the top financiers globally in terms of lending and underwriting of debt and equity issuances in the oil and gas sector.[6] This financing is often well above average relative to the banks’ size, compared to their peers. Moreover, the rollback of oil and gas financing policies and emissions targets at several of the Big Five suggests a growing appetite to continue financing oil and gas expansion well into the future.

At a high level, Canada’s Big Five banks appear to have diverged sharply in their response to transition risk exposure from oil and gas financing in recent years. RBC and Scotiabank dropped their 2030 emission reduction targets (and the latter dropped its 2050 net-zero target); simultaneously, they increased their financing of oil and gas expansion companies by ~8% and ~2%, respectively, from 2024 to 2025. In contrast, CIBC, TD, and BMO Financial Group decreased such financing by ~9%, 7%, and 20%, respectively, over this period.

However, these headline figures do not capture more granular shifts in financing. A CTI analysis of data from the Banking on Climate Chaos Coalition shows upstream expansion financing for nine of Canada’s largest upstream producers in 2024 and 2025, broken down by bank (Figure 3).[7]

Figure 3: Big Five and other bank financing of oil and gas expansion across large oil and gas companies in Canada (2024-2025).

Sources: Banking on Climate Chaos Coalition, CTI analysis

Viewing upstream expansion-related bank financing (Figure 3) alongside the risk profile of upstream project portfolios (Figure 2), it is evident that all of the Big Five have increased upstream expansion financing for certain companies with high-risk upstream project portfolios.

Among Canadian oil and gas companies assessed by CTI, Big Five financing increased most sharply for ARC Resources. Each bank increased its upstream expansion financing for ARC by between 80% to 670%, contrasting sharply with the ~60% reduction in financing by non-Big Five banks. CTI analysis suggests a high level of downside risk exposure within ARC’s upstream project portfolio: under a fast-paced transition scenario, ARC’s potential new upstream projects risk reducing upstream value by ~60%, relative to a scenario in which the company invests in no new projects. Big Five financing also increased for Strathcona and Whitecap, despite the significant downside risk exposure of their project portfolios.

Risk from upstream oil and gas expansion exposes a broad range of stakeholders, with cascading effects.

The financial risk exposure of oil and gas expansion in Canada extends well beyond oil and gas companies and their financiers. The same commodity price assumptions that expose bank financing to risk also expose equity investments and government revenues.

Ultimately, value at risk from new upstream projects puts pressure on the credit quality of Canadian oil and gas companies, with potential implications for national financial stability and lending to the broader Canadian economy.

Risk of asset stranding within the upstream oil and gas sector also exposes midstream oil and gas assets – including pipelines – to lower-than-expected throughput volumes and revenues. This risk within midstream activities undermines the financial viability of proposed new pipelines, which may cost Canadian taxpayers tens of billions of dollars.[8]

Continued dependence on the oil and gas sector for economic growth also exposes certain provinces to fiscal risk. Findings from CTI’s Petro-Provinces at Risk suggest a moderate-paced energy transition could eliminate over 80% of Canadian provincial governments’ expected revenue from upstream oil and gas over the next decade. Export Development Canada’s potentially growing exposure to major projects puts federal tax dollars at risk as well.

What does this mean for Canadian stakeholders?

For policymakers and regulators: Ottawa and Alberta’s push for oil and gas expansion appears disconnected from the economic reality facing the sector. Expanding the oil and gas system is very different from – and riskier than – continuing to operate existing assets alone. Consider whether the national strategy reflects a realistic set of assumptions around long-term market conditions, and what role the country could play in an emerging electrotech system. Further diversification of the economy could reduce exposure to transition risk from the oil and gas sector while offering opportunities to lead in a new energy landscape.
For banks: As key markets rapidly transform, can lending portfolios withstand a faster-than-anticipated energy transition? Consider how to adjust financing to a future where demand for oil and gas may be significantly lower than today.
For investors: Asset managers should assess and make investment decisions based on a realistic range of long-term demand scenarios. Pension funds are particularly exposed to transition-related financial risks from oil and gas portfolio companies, due to the decades-long time horizon of their investment portfolios.

Conclusion

The oil and gas sector has played an important economic role in Canada for many years. But the revenues and jobs it generated in the past are not guaranteed in the future. As technology changes exponentially, fossil fuel expansion in Canada leaves oil and gas companies and their financial stakeholders exposed to a growing risk of value destruction. Prime Minister Carney and financial stakeholders must decide whether they are willing to bet Canada’s fortunes on static assumptions, and what role Canada will play in an emerging energy system of the future.

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[1] Ember, Electric Asia (June 2026) pp. 12, 15.

[2] IEA, World Energy Investment 2026 (2026), p. 202.

[3] CTI, The Quiet Retreat: Why the oil and gas industry is implementing its own decline, even as the IEA resurrects an old growth scenario (November 2025).

[4] Institute for Energy Economics and Financial Analysis (IEEFA), The current state of LNG in Canada (July 2026).

[5] IEEFA, The current state of LNG in Canada (July 2026).

[6] Banking on Climate Chaos Coalition, Banking on Climate Chaos 2026 (May 2026), p. 25.

[7] Analysis excludes Imperial Oil due to lack of available data on financing.

[8] Canadian Broadcasting Corporation reports that Canadian taxpayers may potentially cover 90% of the estimated $35.2-$43.7bn cost of a new crude oil pipeline.

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