Costa Rica’s Pioneering Net-zero Implementation Plan Attracts Investment, Withstands Political Changes

With support from a team of technical experts and international funding, the Costa Rican government took several foundational steps as it committed to a midcentury net-zero emissions target in its 2019 National Decarbonization Plan. The target's scope was clearly defined, covering all greenhouse gases and all sectors, excluding international shipping and aviation. Pathways to reach the target were described using a backcasting approach, which grouped the transition to net zero into three phases: foundations (2018–22), inflection (2023–30) and massive deployment (2031–50). For each phase, the plan described actions needed within each sector as well as critical cross-cutting strategies, including financing, just transition and green tax reform. Emphasis was also placed on strategies and investments that should be avoided. The work provided assurance to government ministers, working under then-president Carlos Alvarado Quesada, that adopting a 2050 target was not delaying responsibility, but rather informing near-term actions and investments. The strategy and specific priority actions allowed the government to maintain and build upon progress in electric vehicle deployment, reduce agricultural emissions and increase the use of composting, among other areas.

Critically, the plan was able to withstand a major political shift when President Rodrigo Chaves took office in May 2022 after running a campaign largely focused on completely changing course from the previous administration. This continuity is due in part to the plan’s success in attracting large investments from the International Monetary Fund and Inter-American Development Bank. Because the new administration saw the concrete value of having a strong decarbonization plan — nearly $1 billion in central funding they would not otherwise have had — they began their own prioritization of climate objectives, rather than rejecting the plan outright. Costa Rica demonstrates how a robust implementation plan can withstand such shifts, even in a case where the target was not legally adopted.

It remains to be seen how Costa Rica’s current government will shape its climate agenda. Early priority action areas continue the focus on electric vehicles (in particular, the administration has prioritized operationalizing 1,000 electric buses) and agriculture, with a shift from defining the technical transition pathways to attracting large-scale finance for specific sectors. Banks are signaling their willingness to make low-carbon investments and provide cheaper loans when strong plans are in place.

International investment is one aspect of potential financing, engaging local businesses and investors will also be key politically to make truly transformational change. How to generate these concrete, attractive business opportunities is the next big question for Costa Rica. The Costa Rican government has an opportunity to transform the 2050 National Decarbonization Plan of 2019 into a national investment plan that aligns with its priority areas, calculating costs and estimating needed investments locally and internationally, and making the investment case to local businesses.