As governments gather in Santa Marta today to map out a “just, orderly and equitable” transition away from fossil fuels, the world is already being pulled in the opposite direction. 

Conflict in the Middle East - initiated by the US and Israel - is driving up oil and gas prices, with the effects moving rapidly through global markets. Europe - still weakened by the last fossil fuel crisis triggered by Russia’s invasion of Ukraine - faces another round of rising energy costs. The impact is likely to be far more acute in Asia, where import dependence is high.  

Shipping through the Strait of Hormuz - a critical energy chokepoint that carries about 20 per cent of the world’s oil - has been largely disrupted by Iran since hostilities began in late February. As the main buyers of energy from the Gulf, Asian economies are bearing a disproportionate share of the impact from this crisis.

Many of the consequences are already visible: rising prices, inflationary pressure, deepening cost-of-living crises, and growing risks to food and energy security. 

Liquefied natural gas prices in Asia surged to more than twice their previous levels in the weeks following the outbreak of the conflict. At the same time, regional imports fell to a six-year low, resulting in rising electricity costs and supply shortages across multiple industries.

Countries like Bangladesh, Pakistan, and Sri Lanka rely heavily on imported oil and gas to meet their domestic needs. However, they do not have sufficient foreign exchange reserves to reliably secure these supplies in unstable global markets. When prices surge or availability tightens, they are pushed into difficult choices between maintaining energy access, controlling inflation, and preserving fiscal stability.

One of the most significant responses has emerged in Asia’s power sector. With energy supplies constrained and prices climbing, several countries in the region have turned back to coal - a fuel many had been moving away from.

Amidst all this, fossil fuel companies are once again positioned to reap extraordinary profits.

Santa Marta must confront this contradiction. It seeks to leave fossil fuels behind, yet the global economy remains structured in a way that not only sustains their dominance but repeatedly  rewards them - especially in times of crisis.

What is needed now is a shift in the rules themselves. Governments should move beyond one-off measures and introduce permanent taxes on fossil fuel profits - nationally, regionally and globally. A sustained surtax would begin to shift incentives: not by placing the burden on consumers, but by targeting the capital that finances climate breakdown.

A 20% surtax on the global profits of the world’s 100 biggest oil and gas companies between 2022-24, would have generated an estimated annual income of US$236 billion, US$184 billion and US$147 billion respectively. If applied since the Paris Agreement in 2015, more than US$1 trillion could have been collected and channeled into climate finance, particularly for countries in the Global South that suffer the greatest impacts of a crisis they did little to cause.

National action alone, however, will not be enough. Fossil fuel companies operate across borders and are highly effective at shifting profits to minimise their tax burden. Without global cooperation, the effectiveness of any one country’s efforts will be limited. Furthermore, it is crucial to ensure that the tax income is distributed fairly between countries, and that the measures link directly to a plan to phase out fossil fuels altogether. 

This is where the UN Framework Convention on International Tax Cooperation - which is being negotiated now - is critical. It could establish the global rules needed to ensure that multinational corporations - including fossil fuel giants - are taxed fairly and consistently. It also offers a rare opportunity to link international tax cooperation with climate goals, by embedding the principle that polluters should pay at the heart of the global tax system.

Santa Marta cannot afford to ignore this. A just transition is not only about phasing out fossil fuels; it is about reshaping the economic structures that keep them in place. 

The choice is stark. Continue to rely on a system that rewards pollution and deepens inequalities - or rewrite the rules so they serve a safer, more sustainable future.