This article is part of a Synergies series on Next generation trade arrangements for environment and sustainable development. Any views and opinions expressed are those of the author(s).

Any opinions or arguments expressed in this article are personal and do not necessarily reflect the official views of the OECD or of its member countries.

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For decades, global energy security was largely synonymous with securing access to fossil fuels. When markets tightened or geopolitical tensions disrupted supply, governments and companies alike typically responded by diversifying suppliers, increasing production, or expanding—and lately also releasing—strategic reserves to temporarily cushion against external shocks.

Today, however, the landscape is being reshaped by decarbonization, electrification, technological innovation, and shifting geopolitical realities. In this context, countries are seeking to build greater resilience and lower their dependence on volatile fossil fuel markets and weaponized supply routes.

As net-importers seek to electrify end uses (power, heat, and transport systems) to shield their economies from future energy shocks, the priority has become ensuring reliable and diversified access to the critical materials and technologies necessary for national security, clean energy manufacturing, and industrial competitiveness. 

These dynamics are contributing to a gradual structural decline in fossil fuel consumption which will inevitably translate into a weakening of global fossil fuel demand. This creates a challenge that is often overlooked: the growing mismatch between anticipated decline of fossil fuel demand and continuing supply, which, if left unmanaged, could undermine economic stability, energy security, and international cooperation precisely when these are needed most.

Many fossil fuel-importing countries are accelerating investment in renewable energy, electrification, and energy efficiency. These investments are increasingly seen as tools for improving trade balances and strengthening energy sovereignty. IEA analysis shows that such investments avoided approximately $260 billion in fossil fuel import costs in 2025 alone.

If net-importing countries stand to benefit from lower exposure to volatile fuel prices, net-exporting countries face growing uncertainty. Despite this, many producing developing countries are not yet fully factoring these trends in their long-term planning and investment decisions, as they continue to depend heavily on fossil fuel export revenues for employment, public finances, foreign exchange earnings, and economic growth. If demand declines faster than expected, countries that remain dependent on fossil fuel exports could face major fiscal and economic disruptions. OECD analysis developed in the context of the Inclusive Forum on Carbon Mitigation Approaches (IFCMA) suggests that these risks will become increasingly significant unless exporters successfully diversify their economies and develop new sources of competitiveness.

If investment and production decisions become disconnected from actual demand trajectories, markets could experience periods of oversupply, underinvestment, price volatility, and supply disruptions. Such instability would affect both fossil fuel consumers and producers.

The challenge, therefore, is not simply reducing fossil fuel use, but managing the transition from a fossil-based system to an emerging economic model underpinned by cleaner technologies. Developed through the OECD Development Centre's EFFECT initiative and incorporated into the Global Climate Action Agenda, the COP30 Action Plan on Collaborative Exporter–Importer Governance (CEIG) for Shared Prosperity Post-Fossil Fuels was designed to help exporters and importers cooperate to reduce uncertainty and better cooperate on future development trajectories rather than respond independently to changing market conditions.

Despite growing recognition of transition risks, most policy discussions continue to focus on either the demand or the supply side. 

Importing countries develop decarbonization pathways and net-zero strategies. Exporting countries pursue diversification and industrial transformation agendas. Yet, these efforts often proceed in parallel with limited coordination between those who consume fossil fuels and those who produce them.

CEIG aims to fill this governance gap. Without greater transparency and cooperation, exporters may continue investing on the basis of inaccurate demand assumptions, while importers may underestimate the economic consequences of declining demand in producer countries. The result can be a disordered transition characterized by stranded assets, fiscal instability, geopolitical tensions, and growing inequalities.

Through structured bilateral or plurilateral exporter-importer partnerships, importing countries can share information about projected demand trajectories, industrial decarbonization pathways, nationally determined contributions, and phase-out schedules. Greater transparency enables exporters to better anticipate market shifts, adjust investment strategies, and plan diversification efforts before fiscal pressures become acute. In turn, exporters can communicate their own transition plans, investment priorities, and economic diversification strategies, creating a more predictable environment for trade and investment cooperation.

Such transparency will not eliminate uncertainty, but it can significantly reduce the risks associated with poorly coordinated decision-making.

Managing fossil fuel decline alone is not enough. A successful transition requires building new engines of growth before old ones disappear. This is another area where CEIG's cooperative mechanisms can add value.

As global decarbonization and electrification gather pace, investment decisions and the localization of production will increasingly respond to evolving criteria, including low emissions intensity production, access to reliable and affordable renewable energy sources and storage technologies, well-developed sustainability regulatory frameworks, and geopolitical resilience. In this context, CEIG seeks to harness the complementarities between the economic structures of fossil fuel exporters and importers to shape future comparative advantages rather than perpetuate existing dependencies. This can help exporters overcome binding constraints related to scale, risk, and political economy dynamics while enabling importers to reduce vulnerabilities associated with highly concentrated supply chains.

The transition to a low-carbon economy is reshaping global demand for energy, minerals, and industrial products. By aligning cooperation across fossil energy production and consumption, critical minerals, and energy-intensive industries as the main drivers of fossil fuel demand, exporters and importers can move beyond a narrow focus on emissions reduction towards a broader strategy for trade, investment, and industrial development. This integrated approach can help ensure that the transition creates new opportunities for economic diversification, resilience, and shared prosperity.

Methane abatement offers one of the most immediate and cost-effective opportunities for exporter–importer cooperation. In many developing country contexts, fossil fuels are likely to remain an important industrial fuel and feedstock during the transition, particularly for high temperature industrial processes for which alternatives are not yet technically or commercially viable. In this context, reducing methane emissions from fossil fuel production becomes a critical component of broader industrial decarbonization strategies. 

Exporters and importers can foster regulatory cooperation on methane intensity methodologies and build convergence towards robust monitoring, reporting, and verification systems aligned with international standards, such as the UNEP Oil and Gas Methane Partnership (OGMP) 2.0. As methane performance increasingly influences investment and procurement decisions, such cooperation can also create mechanisms for market differentiation and reward verified emissions reductions through preferential sourcing arrangements, long-term contracts, debt for climate swaps, or other forms of market recognition.

Mining and mineral processing and refining are highly energy-intensive activities. Exporter-importer cooperation may take the form of co-investments in technology upgrading, the deployment of renewable-powered or hybrid energy systems, and the development of supporting sustainable infrastructure. Exporter-importer cooperation can help chart technological pathways and financing options for green mineral extraction and processing in producing developing countries. However, minerals processing often depends on industrial inputs such as sulphuric acid, which is largely derived from sulphur recovered during oil and gas processing. High temperature industrial processes may also still need to rely on fossil fuels where cleaner alternatives are not affordable or available at scale. In this scenario, methane performance does not only reduce emissions from fossil fuel production itself; it also lowers the carbon footprint of downstream products and industries that continue to depend on fossil fuels as a source of energy or industrial feedstock. 

Trade-exposed energy-intensive industries such as steel are major consumers of both energy and processed minerals and therefore provide a crucial link between upstream resource production and end-use markets. Rather than viewing trade-related climate measures solely as sources of tension, mechanisms such as the EU’s Carbon Border Adjustment Mechanism (CBAM) can serve as catalysts for deeper exporter–importer cooperation for the decarbonization of trade flows. Joint efforts can focus on technology upgrading, standards harmonization, and policies that stimulate demand. Such cooperation can drive market differentiation throughout upstream oil, gas, mineral, and energy-intensive products supply chains. At the same time, it can support the localization of higher value-added industrial activities in resource-rich countries, enabling them to capture more value from their natural resources without resorting to trade distortive measures.

Reducing reliance on fossil fuels requires reallocating capital to sectors with higher productivity in a decarbonized economy. To do so, correcting misaligned incentives that artificially alter the competitiveness between fossil energy sources and cleaner technologies is an imperative. Current market structures and incentives continue to favour carbon-intensive activities whose externalities go largely unpriced. As a result, significant volumes of capital are still directed towards often subsidized fossil fuel production and consumption, locking many economies in path dependence.

In both exporting and importing countries, CEIG seeks to address these distortions by envisaging mutual commitment and technical cooperation on critical reforms, including carbon pricing, removal of inefficient fossil fuel subsidies, and improvements in energy price and electricity market regulation. By undertaking these reforms, countries can send the right market signals for reallocating capital, while creating fiscal space to support structural transformation. In addition, innovative financial instruments, such as green swaps, and dedicated vehicles, including strategic investment funds, can help mobilize finance at scale and align public and private capital and investment flows with structural transformation objectives and value-added export opportunities.

Given their interdependence, neither fossil fuel exporters nor importers can manage the transition successfully on their own. The pathway to a just, orderly, and equitable post-fossil fuel economy depends on cooperation between both. CEIG offers an integrated framework for transition cooperation at the intersection of energy security, supply chain resilience, and economic competitiveness. Ultimately, the success of CEIG will be measured by the emergence of concrete partnerships among countries willing to experiment with cooperative solutions designed to deliver tangible benefits on both sides of the trade relationship. International practice is already evolving in this direction, albeit with a more limited scope of trade cooperation. For example, the Agreement on Climate Change, Trade and Sustainability (ACCTS), combines removal of fossil fuel subsidies and barriers to trade of environmental goods and services with voluntary guidelines on eco-labelling. 

Beyond supporting pilot partnerships, CEIG can serve as a dialogue and collaboration platform to reduce the growing fragmentation of global transition governance. Numerous initiatives already exist to address methane reduction, critical minerals, industrial decarbonization, managed fossil fuel decline, clean energy investments, industrial decarbonization, and green industrialization. While each initiative addresses an important part of the challenge, coordination across them remains limited. As a result, opportunities to leverage synergies between energy security, industrial development, strategic supply chain resilience, and economic diversification are often missed.

Rather than creating another standalone initiative, CEIG seeks to provide the connective tissue that is currently missing from transition governance through which existing initiatives can be better aligned. In the spirit of the Global Climate Action Agenda, CEIG can help translate a fragmented landscape of efforts into a more coherent framework for action, bringing together complementary initiatives and tracking collective progress towards the realization of a shared agenda for resilience, competitiveness, and prosperity.

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Lahra Liberti is Head of Unit, Natural Resources for Development, OECD Development Centre.

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