The Climate Action Monitor 2026

3. How far did countries’ climate action progress?

As countries move from raising ambition to implementation, the central question is whether their policy frameworks can deliver the emissions reductions consistent with their climate mitigation goals. Emerging evidence shows that countries with more comprehensive and stringent climate policies tend to achieve better emissions outcomes (Nachtigall et al., 2024[1]); yet the policy effort required to close the gap between current emission trajectories and climate goals remains substantial (Chapter 1).

The implementation challenge is growing. The year 2025 was marked by a rapidly evolving international context, energy security concerns, fiscal constraints and competitiveness pressures. These headwinds coincide with delays in the submission of Nationally Determined Contributions establishing targets for 2035 (NDCs) further underscoring the increasing uncertainty surrounding climate mitigation action.

Climate action is still advancing, but momentum is waning. Policy removals – existing climate policies that were removed - rose sharply in 2025, yet global climate action, considering the countries covered by the CAPMF, expanded by around 1%. Although this pace was broadly consistent with recent years (OECD, 2025[2]), it remains well below the average annual increase recorded between 2010 and 2021. These developments are not contradictory: new or strengthened policies continued to outweigh removals in aggregate, but the rising number of removals signal a more uncertain policy environment. Countries are therefore continuing to strengthen climate policy – but not yet at the speed or scale required to deliver on their commitments.

This chapter draws on the Climate Actions and Policies Measurement Framework (CAPMF) complemented with other sources to assess key developments in countries’ climate action in 2025. Developed under the International Programme for Action on Climate (IPAC), the 2026 edition of the CAPMF tracks the adoption and the stringency of the same 86 key policies across 127 jurisdictions (up from 97 in 2025) between 1990 and 2025 (Box 3.1), offering a comprehensive view of countries’ evolving climate policy landscapes.

The 2026 edition of the Monitor features a regional focus on the Asia-Pacific region and the electricity sector – the region and the sector that accounts for the largest shares of global GHG emissions. Country-specific data on climate action can be found on the IPAC Climate Action Dashboard.

Box 3.1. The OECD Climate Actions and Policies Measurement Framework

There are multiple ways of measuring climate policy and understanding whether climate policy is strengthening. The OECD Climate Actions and Policies Measurement Framework (CAPMF) tracks both the adoption and the stringency of 86 policies across the same 127 jurisdictions (126 countries and the European Union as a bloc), providing comparable data to identify policy gaps and enable analytical work (Figure 3.1).

The CAPMF offers three key contributions:

• Extended coverage of climate policies: it covers a wide range of climate and climate-relevant policies adopted across six key sectors, including market-based instruments (e.g. carbon pricing), non-market-based instruments such as regulatory instruments (e.g. performance standards) or information instruments (e.g. labels) as well as policies related to climate targets, governance, and data, offering a comprehensive picture of countries’ climate policy landscape. See Annex for details.

• Tracking policy stringency: it goes beyond policy adoption by tracking policy stringency - the extent to which instruments incentivise or enable emissions reductions. Policy stringency captures the strength of individual instruments (e.g. carbon tax rates, emission limits, subsidy levels) and is becoming increasingly important as countries shift from introducing new measures towards strengthening existing ones. For each measure, policy stringency is normalised on a scale from 0 (not adopted) over 1 (low stringency) to 10 (high stringency) to enable aggregation of policies into meaningful categories.

• Harmonised methodology and closed scope: It provides comparable data across countries by tracking the same policies including their existence, thus enabling robust quantitative cross-country analysis, supporting governments refine policies to meet their climate commitments (Stechemesser et al., 2024[3]).

3.1. Climate action continued to advance in 2025 despite rising policy removals

Policy removals increased sharply in 2025 (Figure 3.2) while net-zero targets became increasingly contested, and several major climate and broader environmental measures were weakened, delayed or removed. Examples include Canada's repeal of the federal consumer carbon pricing scheme and the US withdrawal from the Paris Agreement.

The previous spike in policy removal was experienced in 2020, driven largely by the COVID-19 crisis, as governments introduced energy-related relief measures to cushion energy costs and broader economic hardship for households and businesses, including carbon-intensive sectors such as aviation (Nachtigall, Ellis and Errendal, 2022[5]). It also reflects delays by some countries in submitting their second Nationally Determined Contributions (NDCs), which are considered as procedural removals under the CAPMF methodology since they constitute a removal relative to the expected trajectory of increasingly ambitious climate commitments under the Paris Agreement. A similar dynamic contributed to the observed increase in policy removals in 2025, as several countries had not yet submitted updated NDCs by the reporting cut-off date.

Despite the surge in policy removals, global climate action (considering 127 CAPMF-covered countries) expanded by around 1% in 2025 (Figure 3.3.). These developments are not contradictory as new or strengthened policies in aggregate continued to outweigh removals. The CAPMF measures climate action by considering both policy adoption and policy stringency, which captures the strength of individual instruments, for example the rate of a carbon tax. While the increase in 2025 was broadly in line with the pace recorded in recent years (OECD, 2025[2]), it is well below the average annual increase of around 10% recorded between 2010 and 2021 – a period in which countries expanded their policy portfolios and strengthened existing policies. Climate policy therefore continued to advance in 2025, but against a backdrop of growing uncertainty and considerably slowing momentum than during the rapid expansion in the 2010s.

3.1.1. Climate targets and carbon pricing led policy progress in 2025

The observed progress in climate policy in 2025 was concentrated in a relatively narrow set of developments, notably stronger climate targets, increased use of Minimum Energy Performance Standards (MEPS) and expanded carbon pricing, with the largest gain observed in the buildings, industry and electricity sectors (Table 3.1., Box 3.2). Moreover, progress was uneven across regions, with Europe recording the largest increase in climate action, followed by Asia and the Americas. Much of this progress reflected new or strengthened net-zero commitments (e.g. Belize and Bolivia), updated NDCs (e.g. EU, Moldova, Norway) and stronger carbon pricing, notably carbon taxes (e.g. Israel and Thailand) and emissions trading schemes (e.g China). While more ambitious targets contributed substantially to measured progress, the key challenge remains translating these commitments into sufficiently ambitious sectoral policies and measures.

Table 3.1. Largest increases in climate policy effort between 2024 and 2025

Increase in climate action (0-10) between 2024 and 2025: by dimension

Dimension	Largest increase	2nd largest increase	3rd largest increase
Policy (instrument) type	Targets	Performance standards	Information
Policy instrument	MEPS for appliances	Carbon taxes	Labels for appliances
Sector	Buildings	Industry	Electricity
Region	Europe	Asia	Americas
Country	Denmark	Bulgaria	Croatia

Note: MEPS: Minimum Energy Performance Standards (MEPS); The table reports the largest increases in climate action between 2024 and 2025 across different dimensions. It does not reflect 2025 climate action levels. CAPMF scores capture the extent and development of climate action but are not intended to rank countries or assess overall policy performance. Box 3.2 provides more details on specific policy developments.

Source: CAPMF database.

Box 3.2. Key climate policy developments in 2025

Climate action strengthened in 2025. Key trends include:

• More ambitious climate targets and carbon pricing drove policy progress: For example, Belize and Bolivia included net-zero targets in their updated Nationally Determined Contributions (NDCs), while Türkiye and the United Arab Emirates adopted national climate laws that enshrine their net-zero targets in legislation. New carbon pricing schemes were introduced in several countries, including new carbon taxes in Israel and Thailand, while existing emission trading schemes and carbon taxes were strengthened in China and South Africa.

• Industry was one of the main sectoral drivers, mainly supported by stronger carbon pricing and strengthened regulatory approaches.

• Europe recorded the largest increase in climate action, reflecting its more ambitious NDC, the European Union’s Clean Industrial Deal and continued implementation of its Fit-for-55 package.

• Climate action continued to strengthen, but changes were concentrated in a minority of jurisdictions. Among the 127 jurisdictions covered by the CAPMF, 76 strengthened climate action in 2025 and 8 remained unchanged.

• At the country level, Denmark, Bulgaria and Croatia recorded particularly large increases in climate action. Specifically, Denmark introduced a new carbon tax for industry and advanced its Green Denmark reform, including the world's first tax on livestock emissions. Bulgaria and Croatia both adopted an economy-wide net-zero target by 2050.

Source: CAPMF database, https://oe.cd/dx/capmf.

3.2. Climate policy instruments have expanded at markedly different rates

Climate policy frameworks have broadened substantially over the past decade with different policy instruments advancing at different rates (Figure 3.4). For example, minimum energy performance standards (MEPS) and appliance labelling schemes were already widely established by 2010 and continued to expand steadily thereafter. By contrast, net-zero targets, plans for coal phase-outs and planned bans on the sale of internal combustion engine (ICE) vehicles were still rare in 2015 but have since spread rapidly. Climate advisory bodies have also become increasingly common. The implementation of market-based instruments (MBIs), including carbon taxes and emissions trading schemes (ETSs), have expanded more gradually, reflecting both the political economy of their introduction and the time required to introduce new, more complex schemes. Many countries also adopted competitive auctions in renewable energy support which can deliver increased capacity more cost-effectively.

 

Note: ICE: Internal Combustion Engine; CORSIA: Carbon Offsetting and Reduction Scheme for International Aviation; MEPS: Minimum Energy Performance Standards.

Source: Based on data from OECD, IEA, ITF, World Bank and others using the methodology of (Nachtigall, D. et al., 2022[4]).

3.2.1. Non-market-based policy instruments have steadily expanded since 2010

The implementation of non-market-based instruments (NMBIs) has outpaced MBIs between 2010 and 2025 (Figure 3.5). NMBIs are central to many countries’ policy mix to reduce GHG emissions, promoting low-carbon choices without direct price signals through regulations, non-monetary incentives, enhanced information or enabling infrastructure such as public transport infrastructure. As such they address specific technological, informational and behavioural barriers and provide clear signals to households and firms by prescribing specific performance standards or technologies. Most of the growth in recent years was driven by regulations such as performance and technology standards (Figure A C.1). More details on NMBIs are provided in the recent IPAC Data Insight.

NMBIs continue to constitute the backbone of climate policy in most countries. Yet, the role of NMBIs varies considerably (Figure A C.2), reflecting differences in emissions profiles, institutional capacity and political priorities. They are much more prevalent in non-OECD countries, particularly in Asia and some African countries. In contrast, OECD countries tend to place greater emphasis on MBIs, which strengthen the role of economic incentives in climate policy mixes.

Both instrument types have proven to reduce emissions (Stechemesser et al., 2024[3]), (OECD, 2025[6]). Yet, the evidence increasingly points to the importance of policy complementarity rather than reliance on any single instrument (Box 3.6). MBIs can provide broad incentives to reduce emissions and support cost-effective abatement, while standards, enabling infrastructure, and information instruments can address barriers that price signals alone may not overcome. In combination, both instrument types create a cohesive policy mix to reduce emissions.

3.2.2. Policy diversity increased steadily during the 2010s, although the increase has levelled off in recent years

Policy diversity increased markedly in the 2010s but the pace of diversification has slowed in recent years. Figure 3.6 presents a policy diversity measure, ranging from 0-1, with higher values indicating that climate action is distributed more evenly across different policy instrument types such as carbon pricing, subsidies, regulatory instruments, or information instruments.1 The measure rose from around 0.77 in 2010 to around 0.90 in 2023, before remaining broadly stable through 2025. This suggests that climate policy mixes have become less concentrated in a small number of instrument types. However, policy diversity should not be interpreted as a measure of policy stringency or effectiveness. A more diverse policy mix can support mitigation by combining complementary instruments that address different market failures, behavioural barriers and sector-specific challenges but its effectiveness ultimately depends on the design, stringency and interaction of those instruments. As climate policy frameworks mature, the key question is therefore not only whether countries deploy a broad range of instruments, but whether these instruments are sufficiently stringent and mutually reinforcing rather than overlapping and inefficient (Adetutu A. and O. Bystrom, Forthcoming[7]).

3.3. Climate action has advanced across all continents, but at different paces

Climate action has continued to advance across all continents; however, the pace and extent of progress have become increasingly uneven (Figure 3.7). Policy effort was broadly steady until 2021, since then, momentum has slowed in all parts of the world. Countries in Europe and Oceania maintained comparatively stronger policy efforts and the largest gains in climate action, while progress elsewhere was often more gradual, reflecting differences in economic structures, institutional capacity, development priorities and access to finance (Annex C for regional groupings).

Despite progress, all countries and regions still retain multiple opportunities to strengthen climate action and increase implementation efforts. Stronger climate action is associated with smaller gaps between current emissions trajectories and countries’ NDC targets (Chapter 1). Encouragingly, countries that face the largest challenges in meeting their NDCs often retain the broadest range of untapped policy options (Chapter 1). Conversely, countries with more developed policy frameworks face comparatively smaller implementation gaps. For these countries, expanding climate action will increasingly depend on strengthening and improving existing policies rather than introducing new ones.

Growing differences in climate policy matter beyond national borders. Regional averages also mask considerable within-region variation. Widening disparities of climate action across countries and regions raise concerns about competitiveness and carbon leakage, which could undermine the effectiveness of global mitigation efforts (IPCC, 2022[8]) (Hemmerlé, Kruse and Pisu, 2025[9]). Supporting countries in strengthening climate action is therefore increasingly important. As emerging and developing economies account for a growing share of global GHG emissions (Chapter 1), their climate policies will be critical for global mitigation outcomes. A more balanced and just global transition will also depend on ensuring that the costs and benefits of climate action are shared more equitably across and within countries (OECD, 2025[10]) (Immervoll, 2026[11]).

Climate action in Africa continued to advance, supported by stronger climate commitments, growing renewable energy investments and increasing integration of climate objectives into development strategies. Most African countries remain relatively small contributors to global GHG emissions, although emissions are expected to rise as populations and economies grow. Although African countries have adopted relatively less policies, several have emerged as global policy innovators. For instance, Ethiopia became the first country to ban imports of new passenger vehicles with internal combustion engines, while Uganda has committed to electrifying all buses and motorcycles by 2040 (Box 2.1, in Chapter 2) (OECD/GGGI/The World Bank, 2026[12]). Preparations for next year’s COP32 in Ethiopia have further reinforced the continent's ambition to shape the global climate agenda and position itself as a future hub for renewable energy and green industrial development.

Climate action also expanded in the Americas, although progress remained highly uneven. Several OECD countries in the Americas, including Canada, Chile, Costa Rica and Mexico, strengthened climate action through more ambitious targets, renewable energy deployment and sectoral decarbonisation efforts (OECD, 2025[13]). Brazil continued efforts to reduce deforestation while using its COP30 presidency to elevate forests, climate finance and sustainable development in the global climate agenda. Although climate action in both the OECD and non-OECD Americas remains largely driven by NMBIs, carbon pricing has emerged as an increasingly important component of climate frameworks in several countries (OECD, 2025[13]). Moreover, several countries are considering implementing ETS systems and developing voluntary carbon markets. Mexico, in particular, is considering extending its ETS to the agriculture, forestry and other land use (AFOLU) sector. The continent also benefits from important mitigation assets, including vast carbon sinks, and low-carbon electricity systems in several countries. At the same time, the protection and restoration of forests, more sustainable land-use practices and the conservation of biodiversity-rich ecosystems could make a substantial contribution to both regional and global climate objectives.

Asia expanded its climate action, although substantial differences remain across its subregions and between OECD and non-OECD countries. OECD countries in Asia continue to have larger and more comprehensive climate policy mixes than their non-OECD counterparts. Asia OECD countries continue to have larger and more comprehensive climate policy mixes than East Asia, South Asia and Southeast Asia gradually expanded their climate policy portfolios (Figure 3.15) while Central Asian economies have made gradual but noteworthy progress in expanding climate action in recent years (Box 3.3). Key drivers of climate action in Asia have been NMBIs, particularly regulations and information instruments, alongside the growing adoption of net-zero targets. 23 of the 34 Asian countries covered by the CAPMF had established net-zero targets. The continent occupies a particular important position in the global transition. It combines a large share of global emissions and continued dependence on coal with rapidly growing clean-energy investment and deployment and leadership in key low-carbon technologies (IEA, 2026[14]). The pace at which these trends translate into stronger policy implementation and emissions outcomes will have major implications for the global climate. However, across Asia different regions are implementing action at markedly different speeds. A more granular perspective is therefore warranted necessary. Section 3.5 provides a more detailed analysis on sub regions in Asia.

Europe continued to record one of the strongest growth rates in climate action. For European OECD countries, a large part of the progress was driven by EU-level climate policies, including the EU-wide NDC, its 2050 net-zero target and climate-related EU Directives such as the Renewable Energy Directive and the Energy Efficiency Directive, which were increasingly transposed by Member States. The EU ETS – Europe’s flagship carbon pricing scheme – also played a key role with permit prices rising from around EUR 5 in the first phase 2005-2008 to around EUR 80 in 2025. More recently, the adoption of the Clean Industrial Deal reflected the EU's ambition to remain the world's leading climate-neutral region while strengthening its industrial base, accelerating investment in clean technologies and reducing strategic dependencies. Beyond EU-level policies, national-level policies remained a key driver of policy innovation and policy diffusion. In addition, EU-level policies have increasingly influenced policy development in non-EU and non-OECD European countries, many of which have adopted similar measures to strengthen alignment with the EU, their principal trading partner.

Oceania also recorded one of the strongest growth rates in climate action. However, differences remain between OECD and non-OECD countries. Australia and New Zealand have enshrined net-zero emissions targets for 2050 in law and support their implementation through a diverse policy mix. New Zealand has been working towards integrating agricultural emissions into its emission trading system. Australia has focused on renewable energy deployment and carbon pricing through the Safeguard Mechanism, while introducing clean energy and green industry investment measures to support electrification, clean manufacturing, hydrogen and other low-emission exports. In contrast, non-OECD Oceania countries – Fiji, Papua New Guinea, Samoa, Solomon Islands and Vanuatu – generally have more limited institutional capacity and fiscal space for climate action, although they remain active in international climate agreements. Notably, Vanuatu has established a climate advisory body officially mandated to advise the government on climate policy.

Box 3.3. Climate action in Central Asia is taking shape, but important gaps remain

Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) together with Mongolia account for a small share of global GHG emissions. Yet, the region’s economies remain highly dependent on fossil fuels and natural resources, making climate mitigation crucial both for supporting global climate goals and strengthening long-term economic resilience and diversification.

The adoption of key climate mitigation policies across Central Asia and Mongolia remained uneven in 2025 (Figure 3.8). While Kazakhstan, Kyrgyzstan, Mongolia, and Uzbekistan have established net-zero targets, several major mitigation measures – such as coal phase-out, bans on internal combustion engine vehicles and carbon taxes - have yet to be adopted in the region. Market-based instruments (MBIs) remain relatively scarce, with fuel excise taxes and feed-in tariffs representing the most widely implemented measures, whereas emissions trading systems and renewable energy auctions are still uncommon. The uptake of non-market-based instruments (NMBIs) is also mixed: while some countries have introduced measures such as air pollution standards, appliance labelling schemes and minimum energy performance standards, coverage and implementation remains uneven across the region. The emerging picture is therefore one of strengthening policy frameworks, but still incomplete policy mixes. Strengthening the coverage, stringency and coherence of both MBIs and NMBIs could help countries translate climate targets into more effective mitigation outcomes.

The analysis also highlights an important analytical gap. Evidence on policy effectiveness of individual climate policies and policy mixes remains scarce in many middle-income countries despite their growing role in global mitigation. Comparable policy data, such as the CAPMF, can help close this gap by providing a critical foundation for assessing policy outcomes and identifying the most effective approaches to reducing emissions.

Figure 3.8. Central Asia and Mongolia have a diverse set of policies

Adoption of key climate policies: Central Asian countries and Mongolia, 2025

Note: MEPS: Minimum Energy Performance Standard; ICE: Internal combustion engine; ETS: emissions trading scheme. Source: (OECD, forthcoming[15]).

3.4. Climate action has advanced unevenly across sectors

Between 2010 and 2025, countries substantially strengthened climate action across the energy sectors of buildings and industry and – to a lesser extent – electricity and transport (Figure 3.9.). This expansion was driven by a broad mix of instruments. Financial support for clean electricity and low-carbon technologies – such as heat pumps and electric vehicles – became increasingly widespread, helping accelerate deployment and reduce technology costs through scale effects and innovation. Carbon pricing also expanded, particularly in the electricity sector, where ETS covered electricity generation in an increasing number of jurisdictions. In parallel, policies promoting energy efficiency in end-use sectors, including minimum energy performance standards or energy labels, helped reduce energy demand and costs for households and firms, while strengthening resilience to energy price shocks (Box 3.4).

Progress has been much more limited in the agriculture and the waste sectors. This reflects the persistent challenges of reducing emissions in these sectors. As emissions from agriculture and waste are yet to fall in many countries (Chapter 1), stronger and more targeted policy efforts would help to put emissions on a sustained downward trajectory (OECD, 2026[16]). Encouragingly, some countries have started to expand climate action. For example, Australia and Germany have incorporated waste into their ETS, while Denmark plans to introduce a pricing mechanism for GHG emissions from agriculture (OECD, 2025[2]).

Box 3.4. Energy efficiency policies are widespread, but significant gaps persist

Recent energy market disruptions have highlighted the energy security risks associated with fossil fuel dependence. By reducing energy demand, these policies can lower import dependence, cushion households and firms from price shocks and strengthen the resilience of energy systems. A recent Data Insight tracks the adoption and stringency of 13 key energy efficiency policies, including minimum energy performance standards (MEPS), public financing mechanisms and energy labels, highlighting both progress and remaining opportunities for increased action.

Energy efficiency policies are widespread, but adoption varies widely across instrument types and sectors (Figure 3.10).

• Performance standards are the most widely used instruments: MEPS for appliances, building energy codes and energy efficiency mandates for large emitters are among the most widely adopted policies, reflecting a regulatory focus.

• Information instruments are widespread: Appliance labels and consumer information programmes are commonly used to complement regulations, although coverage remains more limited in many emerging and developing economies.

• Transport remains a key gap: Fuel economy standards and vehicle labelling schemes are less common, despite transport accounting for around 45% of global oil demand.

All countries retain scope to strengthen energy efficiency frameworks, but priorities differ. OECD countries, particularly in Europe, could further tighten the stringency of existing instruments. In non-OECD countries, larger gaps remain in the adoption of core energy efficiency frameworks. As energy demand grows, expanding energy access, while avoiding lock-in to inefficient technologies will require energy efficiency policies supported by adequate finance, technology and implementation capacity.

3.4.1. Climate action has become better aligned with sectoral emission profiles

Climate action has become better aligned with countries’ sectoral emissions profiles. Figure 3.11 presents the average alignment index across countries covered by the CAPMF, where higher values indicate a closer match between the distribution of climate action and the distribution of emissions across sectors.2 The index increased overall between 2010 and 2025, with the largest gains occurring before 2020. Greater alignment means that a larger share of policy effort is directed towards sectors that account for a larger share of emissions. Policy alignment should not, however, be interpreted as a measure of policy stringency, cost-effectiveness or mitigation potential, which also depend on policy design, sector-specific abatement opportunities and country circumstances.

Climate action is likely to deliver larger emissions reductions when policy effort is targeted towards the major sources of emissions. This ensures that mitigation measures are concentrated where they can have the greatest impact. Despite progress, substantial opportunities remain to better align climate action with emissions sources across sectors. For example, in Latin America, transport is the largest source of emissions, yet climate action in the sector remains comparatively limited, suggesting considerable scope for further policy strengthening (OECD, 2025[13]). Similarly, transport and waste account for a significant share of emissions in many African countries but remain among the sectors with the lowest levels of climate action, pointing to persistent sectoral policy gaps (OECD/GGGI/The World Bank, 2026[12]).

3.4.2. Significant opportunities remain to strengthen sectoral climate action

All regions retain substantial opportunities to strengthen climate action, but the nature of these opportunities differs across sectors and instrument types. The CAPMF highlights where policy coverage and stringency remain relatively limited, helping identify areas in which existing policy mixes could be broadened or strengthened (Figure 3.12). Figure 3.12 illustrates climate action across sectors and policy instrument types by continent, distinguishing between OECD and non-OECD countries. Darker colours represent stronger action and lighter colours highlight areas with scope for further policy development.

OECD countries in the Americas, Asia, Europe and Oceania generally maintain the most comprehensive climate policy mixes. Across regions, information instruments and carbon pricing are relatively well developed, supported by widespread fuel excise taxes and the growing adoption and increased stringency of ETSs and carbon taxes. European OECD countries stand out for their stronger reliance on regulatory instruments, reflecting a more extensive use of standards and mandates. Additional opportunities remain for strengthening economic incentives, particularly through subsidies in the electricity and industrial sectors, and to expand regulatory measures in transport where coverage remains uneven, including for heavy-duty vehicles in some countries.

Non-OECD countries in Africa, Asia, the Americas and Europe rely predominantly on NMBIs, such as information instruments and regulations, suggesting scope to complement existing policy mixes with stronger market-based incentives such as carbon pricing and subsidies. Subsidies already play a relatively important role in the transport sector in non-OECD Asia and the Americas, and in the building sector in non-OECD Europe. Among non-OECD countries, European non-OECD countries have the most developed regulatory and information-based policy frameworks, reflecting efforts by several countries to align climate policies with EU frameworks and standards. Pricing instruments are also comparatively more widespread in this region, although substantial scope remains to further strengthen their coverage and stringency. Considerable opportunities remain to further strengthen climate policy frameworks across sectors and instrument types in Africa, the Americas and Asia, which could support low-emissions development and reduce the risk of carbon-intensive lock-in (OECD/UN-Habitat, 2025[18]).

Figure 3.12. Opportunities to strengthen climate policy differ across continents, sectors and instrument types

Climate action (0-10) by continent, sector, and policy instrument type; 2025

Note: The OECD currently has no member countries in Africa.

Source: Based on data from OECD, IEA, ITF, World Bank and others using the methodology of (Nachtigall, D. et al., 2022[4]).

3.5. Regional focus: Asia-Pacific expanded climate action, but progress remains uneven and reliant on non-market-based instruments

This year’s regional focus is on the Asia-Pacific region which is typically defined to encompass South Asia, Southeast Asia, East Asia, and Oceania.3 It is home to around half of global population, produces over one third of global output, and generates approximately 60% of global GHG emissions, making it critical to climate mitigation outcomes. At the same time, it is emerging as a major hub for clean energy deployment and low-carbon investment (ESCAP et al., 2025[19]). While the previous section examined progress in climate action across continents, the analysis in this section focuses on a specific region that reflects important economic and policy linkages while encompassing countries facing many of the world's most significant climate-related challenges.

Climate action has increased steadily across the Asia-Pacific region, driven by both the adoption of new policies and the strengthening of existing measures (Figure 3.13). Since 2010, several countries in the region have introduced carbon pricing schemes, gradually expanding coverage and price levels, and tightening emission limit values, strengthening energy performance requirements and pledging to phase out coal-fired power plants. These developments point to a broadening of climate policy efforts across Asia-Pacific, although progress remains uneven across countries. Due to the region’s significant economic, energy and emissions diversity, a more granular assessment is necessary to better understand the drivers, pace, and patterns of climate action within the region.

3.5.1. Climate action remains uneven across Asia-Pacific

Climate action in Asia-Pacific has increasingly diverged between OECD and non-OECD countries since the 2010s (Figure 3.14). Although climate action increased across the region, Asia-Pacific OECD countries had already stronger policy frameworks in place and expanded their climate action more rapidly, leading to growing divergence in policy implementation. This divergence reflects the range of mitigation challenges facing the region, shaped by differences in income levels, development priorities, energy systems, and reliance on fossil fuels, alongside rapidly growing energy demand. These factors highlight both the scale of the challenge and the importance of strengthened regionally tailored policy responses to support effective climate action.

Climate action also diverged across Asia-Pacific subregions (Annex C for country groupings) (Figure 3.15). Between 2010 and 2021, climate action expanded across all subregions, before slowing thereafter, consistent with trends observed globally. OECD countries in East Asia and Oceania recorded particularly strong growth, driven by the widespread adoption of net-zero targets and the strengthening of policy frameworks, including carbon pricing, renewable energy support measures and energy efficiency policies. South, Southeast and non-OECD East Asia and Oceania also expanded climate action, albeit at a slower pace, contributing to a widening gap in policy implementation across the region, reflecting the differences in mitigation challenges and starting conditions mentioned above.

3.5.2. Asia-Pacific countries strongly rely on non-market-based instruments

A distinctive feature of Asia-Pacific’s policy mix is its strong reliance on NMBIs such as standards and information instruments (Figure 3.16). In 2025, NMBIs accounted for the largest share of climate action across all subregions. Their contribution was especially pronounced in South and Southeast Asia, where it exceeded the OECD average by a considerable margin. Most countries have adopted performance standards and labelling schemes for appliances and electric motors. By contrast, technology standards such as coal phase-out policies remain less widespread, although momentum has increased in recent years through commitments to phase out part of their coal fleets in Indonesia and Republic of Korea – two countries with sizeable coal plant fleets (Chapter 1).

MBIs, including carbon pricing, have also expanded, but remain less widely deployed across the region. Notable exceptions are explicit carbon pricing schemes in China, Indonesia, Japan, Republic of Korea, New Zealand, and Singapore. In 2025, China expanded the sectoral coverage of its ETS from power to steel, cement and aluminium, increasing CO2 emissions coverage from roughly 40% to about 60%, making it by far the largest ETS in the world. Australia operates the Safeguard Mechanism, a baseline-and-credit scheme for large emitters.

Despite the predominance of NMBIs, recent evidence suggests that MBIs played an important role in reducing emissions. A recent systematic ex-post evaluation found that 7 of the 10 identified emissions breaks - defined as emission reductions of above 5% - in Asia-Pacific were associated with the adoption or strengthening of MBIs, either as stand-alone measures or as part of a broader policy package (Stechemesser et al., 2024[3]). For example, Indonesia’s 2014 fossil-fuel subsidy reform (OECD, 2019[20]) - which increased energy prices and strengthened incentives for energy conservation in a manner similar to carbon pricing - combined with stricter energy efficiency standards, contributed to substantial reductions in industrial emissions during the mid-2010s. These findings point to the potential benefits of combining MBIs with regulatory measures as part of the region's policy mix. However, the study covers only seven Asia-Pacific countries, highlighting the need for broader evidence on policy effectiveness in rapidly growing emerging economies. Expanding such analysis beyond emissions outcomes to employment, investment and other economic effects could also help identify policy mixes that support both mitigation and development objectives.

3.6. Sectoral focus: Decarbonising electricity has advanced

Low‑carbon electricity remains central to mitigation. Electrifying end‑use sectors such as transport and buildings, combined with clean power generation, constitutes one of the most important pathways to reduce emissions (IPCC, 2022[8]). Power sector emissions are the largest source of GHG emissions in OECD and OECD partner countries, at around 30 and 37% of total respectively, and are still rising in many emerging and developing countries (Chapter 1). At the same time, the power sector also stands out as a clear area of climate progress. Emissions from the electricity sector fell by 20% in OECD countries since 2015 and have begun to level off in OECD partner countries, supported by rapid renewable energy deployment (Figure 1.9, Chapter 1).

Nevertheless, climate action has not always matched the scale of the challenge and progress has been uneven across countries. This partly reflects the structural, political and social challenges of transforming power systems, particularly in countries with high reliance on coal and rapidly growing electricity demand (OECD, 2026 - forthcoming[21]). Many countries have taken important steps, including expanding support for renewable energy, strengthening carbon pricing, investing in grid infrastructure and adopting regulatory measures to phase out unabated coal. Regulatory instruments for renewables grew significantly.

3.6.1. Regulatory instruments for renewables grew significantly

Climate action in the electricity sector has evolved unevenly across policy instruments (Figure 3.17). Figure 3.17 illustrates the increase of climate action for electricity-related policy instruments between 2010 and 2025. Regulatory instruments to support renewable energy deployment - such as priority grid access and dispatch rules as well as planning tools including integrated resource and network planning - have seen the strongest growth and are now widely adopted. Support schemes such as feed-in-tariffs, renewable energy auctions and tradable certificate schemes have expanded rapidly. These schemes tackle the upfront costs related to low-carbon electricity generation and significantly brought down deployment costs of key technologies and accelerated renewable energy deployment (Hoppmann, Huenteler and Girod, 2014[22]). Despite this progress, global renewable energy deployment falls short of the goal to triple global renewable energy capacity by 2030 (Chapter 1).

Countries are increasingly complementing these supply‑push policies with demand‑pull measures that reduce the competitiveness of fossil-based power generation, particularly coal. Carbon pricing – through ETS or carbon taxes – has expanded rapidly and now covers many power systems worldwide, although levels of ambition and policy design differ substantially across countries (OECD, 2025[23]). Air emissions standards for coal plants have strengthened significantly and pushed the most polluting plants out of the market (Coysh et al., 2020[24]). Coal phase‑out commitments have also increased markedly since the mid‑2010s. These policies set explicit timelines for retiring existing coal-fired power plants, improving long‑term planning certainty for investors, communities and municipalities, helping steer investment towards low‑carbon generation and supporting just transition planning (Box 3.5).

Box 3.5. Mpumalanga – ground zero of South Africa’s Just Transition

South Africa's energy transition is testing how a highly coal-dependent economy can decarbonise while protecting workers, communities and coal-dependent regions. Coal still accounts for around 69% of total energy supply and more than 80% of electricity generation. In 2021, South Africa became the first country to establish a Just Energy Transition Partnership (JETP), supported by international partners. In 2022, under the leadership of the Presidential Climate Commission (PCC), it adopted a national Just Transition Framework, placing jobs, livelihoods and local development at the centre of the transition.

These challenges are particularly visible in Mpumalanga, often described as the ground zero of South Africa's Just Energy Transition. The province produces more than 80% of the country's coal, hosts 11 of the 14 coal-fired power stations operated by Eskom, South Africa's public electricity utility, and contains most of the country's operating coal mines. As coal assets are progressively decommissioned, an estimated 150 000 and 200 000 jobs could be at risk, close to one-fifth of the province's employed labour force. Beyond direct employment losses, municipalities and local businesses remain heavily dependent on coal-related activities.

The closure of Eskom's Komati power station revealed important gaps between national ambitions and local implementation, contributing to concerns about job losses, limited economic alternatives and the adequacy of support measures for affected communities. With further coal assets due to close by 2030 and beyond, early planning, local economic diversification and the co-creation of solutions with communities will be critical to maintaining public support for the transition.

At the same time, Mpumalanga represents one of South Africa's greatest opportunities for green economic transformation and is a key focus area of the country's Just Energy Transition Implementation Plan. Investments in renewable energy, including decentralised solutions such as renewable energy microgrids, alongside efforts to strengthen skills, support green small-scale enterprises and diversify the economy through sectors such as agrivoltaics, sustainable tourism and the circular economy, could generate new sources of growth and employment.

The experience of Mpumalanga highlights that a successful transition involves more than a shift from fossil fuels to clean energy. It also requires diversified local economies that can create sustainable opportunities for affected communities, municipalities and regions.

Source: (OECD, 2026 - forthcoming[21]).

3.6.2. Major coal users have yet to commit to a coal phase-out

Countries responsible for the largest share of global coal use have yet to commit to phasing out coal (Figure 3.18, Panel B). Several countries, including Belgium, Portugal and the United Kingdom, managed to successfully phase out coal in the last years (Figure 3.18, Panel A). Other countries, such as Costa Rica, Iceland or Paraguay have never relied on coal for electricity generation. While a sizeable share of countries have adopted coal phase-out commitments, these commitments cover a much smaller share of global coal-fired capacity, reflecting the absence of commitments among several large coal-consuming economies.

Among the ten countries with the largest coal power fleets, only Indonesia, Republic of Korea and Germany have such commitments in place. Encouragingly, in 2024, Indonesia signaled its intention to bring forward its coal exit from 2045 to around 2040. At the same time, global coal power additions reached a ten-year high in 2025, even as coal use in electricity generation continued to decline amid the growing cost competitiveness of renewable energy (GEM, 2026[25]). This highlights an important implementation gap: expanding the number of phase-out commitments will have limited impact unless they increasingly cover countries where coal-fired capacity and associated emissions are concentrated. While market forces may contribute to declining coal use, formal phase-out commitments remain important for providing certainty on the pace and direction of the transition.

 

Source: Based on OECD data collection and Global Energy Monitor, 2026.

Beyond the coverage and composition of electricity-sector policies, an important question is whether stronger policy action is associated with better emissions outcomes. Countries with more ambitious electricity‑related climate action tend to achieve stronger emissions reductions in the power sector (Figure A C.3). Among the ten countries with the highest level of action in 2025, only two experienced an increase in electricity emissions between 2015 and 2024. In contrast, seven of the ten countries with the lowest levels of action continued to experience rising emissions over the same period. While this association is consistent with stronger policy frameworks supporting emissions reductions, further analysis is needed to identify the contribution of individual instruments and policy mixes. Box 3.6 reviews recent evidence on the effectiveness of targeted mitigation policies in the electricity and other sectors.

Box 3.6. Effective strategies to reduce power sector emissions

Policymakers need robust evidence on which policies are most effective in achieving the Paris Agreement goals – particularly in the power sector, the largest source of global GHG emissions. A study led by the Potsdam Institute for Climate Impact Research (PIK) combines CAPMF data with machine learning to provide the first global, systematic ex post evaluation of policies and policy mixes that have led to large emissions reductions or emissions breaks.

The study finds that policy mixes are more effective than stand‑alone measures: 70% of emission breaks - defined as emission reductions of above 5% - are associated with a mix of policies, compared to 30% with individual measures. In the electricity sector, 50% of breaks are linked to policy mixes. For instance, the UK’s sharp decline in power sector emissions in the mid‑2010s was not only driven by the 2013 carbon price floor alone – as highlighted in the existing literature. Rather the price floor was part of a broader mix of regulatory and market-based measures, including renewable support schemes and coal phase‑out policies. Beyond policy mixes, subsidies and regulatory measures also proved effective in reducing emissions as demonstrated by experiences in Brazil.

Despite a growing evidence base, policy effectiveness remains poorly understood in many developing countries, where rigorous ex-post evaluations are still scarce. Expanding the coverage and comparability of climate policy data - through initiatives such as the CAPMF and IFCMA - will be essential to strengthen the evidence base, identify what works, and support more effective policy design. Extending the analysis beyond emissions reductions to assess impacts on jobs, competitiveness and economic development would help identify policy mixes that work not only for the climate, but also for the economy.

Source: (Stechemesser et al., 2024[3]).

3.6.3. Phase-out commitments of internal combustion engines continue to expand amid growing policy uncertainty

Despite policy removals or delays in some jurisdictions, an increasing number of countries have announced commitments to phase-out the sale of new internal combustion engine (ICE) vehicles with some of these enshrined in law (Table 3.2. ). However, the timing, legal status and scope of these commitments vary considerably across jurisdictions. Moreover, vehicle electrification alone will not be sufficient to achieve sustainable mobility goals, particularly where car dependency continues to rise (OECD, 2021[26]). Complementary policies supporting integrated urban planning, public transport and active mobility will therefore remain important to reduce transport emissions and reliance on private vehicles (Chapter 1).

Table 3.2. Selected legislated measure to phase-out new ICE vehicles

Jurisdiction	Phase-out target	Description
Ethiopia	2024	Ban on the import of new gasoline and diesel vehicles, becoming the first country in the world to adopt such a measure at national level.
Norway	2025	Target for all new passenger cars and light vans to be zero-emission; By December 2025, electric vehicles represented 98% of new car registrations.
Canada	2035	Federal target for 100% zero-emission vehicle sales by 2035.
European Union	2035	CO₂ standards effectively require all new cars and vans to be zero-emission (under revision)
United Kingdom	2035	Ending sales of new pure petrol and diesel cars and vans from 2030, with all new cars and vans required to be zero-emission from 2035
Viet Nam	2040 | 2050	By 2040: production, assembly and import of automobiles and motorcycles using fossil fuels to be discontinued. By 2050: 100% of road transport should use electricity or other green energy sources.

Note: Chile, China, Costa Rica, Iceland, Indonesia, Israel, Mexico, New Zealand, Nigeria and Türkiye announced ICE phase-out plans between 2030 and 2050 but have not enshrined these in law, while in the Republic of Korea the proposal is currently under review. Some countries have adopted ICE vehicle phase-out targets at the subnational level (e.g. California, 2035). The EU's 2035 ban on the sale of new ICE vehicles remains legally binding, as proposals to revise the regulation have not yet completed the legislative process. Several EU Member States such as Denmark, Ireland, The Netherlands, Slovenia and Sweden have set national phase-out targets for new ICE vehicle sales, independently of the EU-wide 2035 regulation. On 5 February 2026, Canada introduced a new automotive strategy and announced stronger greenhouse gas emission standards that could put Canada on a path to achieve a goal of 75% electric vehicle sales by 2035 and 90% electric vehicle sales by 2040. These more stringent emissions standards could facilitate the repeal of the Electric Vehicle Availability Standard.

Source: CAPMF (2026), https://oe.cd/dx/capmf.

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Notes

← 1.  Policy diversity measures how evenly climate action is distributed across different policy instrument types. It is calculated based on the climate action of the 12 policy instrument types covered by the CAPMF. The indicator uses a normalised Herfindahl-Hirschman Index (HHI) –a measure for policy concentration - that ranges from 0 to 1, where 0 indicates complete concentration in a single instrument type and 1 indicates an equal distribution of climate action across all 12 instrument types. The 12 instrument types include taxes and fees, trading schemes, environmentally positive subsidies, performance standards, technology standards, public investment and consumption, other regulatory instruments, information instruments, targets, governance, climate data, and international co-operation.

← 2.  Policy alignment captures how closely countries target climate action towards their main sources of emissions. It is calculated by comparing each sector's share of climate action with its share of total national emissions and aggregates the gaps across sectors. The resulting gap is normalised to range from 0 to 1, where higher values indicate that climate action is more closely aligned with the sectoral emissions profile.

← 3.  East Asia: China, Japan, Republic of Korea, Taiwan, Hong Kong, Mongolia, North Korea. Southeast Asia: Indonesia, Thailand, Vietnam, Malaysia, Singapore, Philippines, Myanmar, Cambodia, Laos, Brunei, Timor-Leste. South Asia: India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Maldives. Oceania: Australia, New Zealand, Fiji, Papua New Guinea, Solomon Islands, Vanuatu, Samoa, Kiribati, and other Pacific Island nations. However, the CAPMF does not have information for all countries. It currently covers 27 countries within the Asia-Pacific region: Australia, Bangladesh, Brunei, Cambodia, China, Fiji, India, Indonesia, Japan, Laos, Malaysia, Mongolia, Myanmar, Nepal, New Zealand, Pakistan, Papua New Guinea, Philippines, Samoa, Singapore, Solomon Islands, Republic of Korea, Sri Lanka, Thailand, Timor-Leste, Vanuatu and Viet Nam.