Global Green Transition Faces Five Key Tests in 2026

EU Carbon Tax to Reshape Global Trade Rules

The European Union’s carbon border tax, known as the Carbon Border Adjustment Mechanism (CBAM), is set to test the bloc’s trade relationships. The levy, which took effect on January 1 for high-emission sectors like cement and steel, is designed to level the playing field by ensuring imported goods face the same green standards or costs as those produced within the EU.

While developing nations warn the tax will increase costs and hinder economic growth, its supporters argue it is already prompting major exporters to consider their own carbon pricing mechanisms. Turkey is among the countries now planning to establish an emissions trading system in response.

Brussels is also preparing to implement other green regulations in 2026, covering everything from heating and cooling to a revision of its emissions trading system scheduled for June.

Mega-Projects in Solar and Wind Power Up

The development of large-scale battery and solar projects is set to continue at a rapid pace across the globe. In Egypt, the 1.1 GW Obelisk project, the largest in Africa, is scheduled to bring its first and second phases online during the year.

Meanwhile, the first phase of the Terra Solar project in the Philippines is expected to begin operations in 2026, delivering 3,500 MW of solar power and 4,500 MWh of storage, making it one of the largest of its kind worldwide.

Major wind projects are also moving toward completion. Germany’s 913 MW Borkum Riffgrund offshore wind farm is expected to be fully operational in the first quarter of 2026. In the UK, the 1.4 GW Sofia offshore park in the North Sea is planned for commercial launch in September 2026.

A New Era of Climate Transparency for Corporations

Despite corporate lobbying and the practice of “greenhushing,” many companies will be required to publish more extensive climate and sustainability data in 2026. In the United Kingdom, companies seeking to list on regulated markets must include material climate-related disclosures in their prospectuses starting in mid-January.

In the European Union, revised European Sustainability Reporting Standards are expected to be formally adopted in the second quarter of 2026, barring further delays. By the end of April, large companies listed on the Beijing, Shanghai, and Shenzhen stock exchanges will be required to submit mandatory sustainability reports, including data on their indirect greenhouse gas emissions.

Fossil Fuel Phase-Out Debate Intensifies

The push to phase out fossil fuels is moving to the forefront of international diplomacy. After more than 80 countries failed to secure a roadmap for eliminating fossil fuels at the COP30 summit in Brazil, the next test will come in April. Colombia and the Netherlands are co-hosting the first international conference on transitioning away from coal, oil, and natural gas in Santa Marta. Brazil has also committed to presenting a roadmap at the COP31 summit, which will be hosted by Turkey in November.

EV Market Braces for New Battery Tech and Chinese Competition

Significant developments in electric vehicles are expected in 2026, even as the EU relaxes its targets for banning internal combustion engines. CATL is set to launch its Naxtra sodium-ion batteries, which the company claims reduce dependence on lithium, charge to 80% in 15 minutes, and perform better in cold temperatures.

In the same year, Stellantis plans to introduce solid-state batteries. Chinese automakers, including Chery and Dongfeng, are also planning to launch pilot fleets or begin limited production, intensifying pressure on the global market.