Costa Rica’s new president, 38-year-old former journalist Carlos Alvarado, recently announced a plan to make his country the first carbon-neutral nation in the world by 2021, the 200th anniversary of its independence.

“Decarbonization is the great task of our generation and Costa Rica must be one of the first countries in the world to accomplish it, if not the first,” Alvarado said in May in his inauguration speech. ”We have the titanic and beautiful task of abolishing the use of fossil fuels in our economy to make way for the use of clean and renewable energies.”

Many news outlets interpreted this as a decision to ban fossil fuels.

But these stories are misleading.

Costa Rica does not have a ban because it does not have a law restricting the use of fossil fuels, nor does it plan to. But it did just ramp up its ambition in reducing its contribution to climate change.

“Some people have misunderstood the President’s declarations because we don’t plan to ban the use of fossil fuels, we plan to phase them out through new policies and incentives so that eventually, down the road, they will be useless,” Costa Rica’s Minister of Environment and Energy Carlos Manuel Rodríguez told me in an email.

A goal of carbon neutrality allows for coal, oil, and gasoline combustion, provided that their greenhouse gas emissions are offset elsewhere. Those offsets can come from planting forests, employing better land management, or perhaps someday even pulling carbon dioxide straight from the air.

But by aiming for carbon neutrality by 2021, the tiny Central American country is signaling it wants to beat larger, wealthier countries to environmental glory. The United Kingdom is weighing going to zero net emissions by 2050. The Netherlands is considering a similar goal. Germany is hoping to reduce its emissions 95 percent but is on track to miss its 2020 targets.

Costa Rica’s climate change targets are ambitious, aggressive, and difficult

Home to 4.8 million people, Costa Rica has long punched above its weight on climate change policy and action, and has produced many leaders who’ve promoted aggressive, progressive environmental policies on the international stage.

Former President José María Figueres served on United Nations Secretary General Ban Ki-moon’s Advisory Group on Climate Change and Energy. His younger sister, Christiana Figueres, led the UN Framework Convention on Climate Change, the group that convened the 2015 Paris climate agreement.

Costa Rica famously has had no army since 1948 and in 1994 amended its constitution to include a right to a healthy environment for its citizens. Today, it already gets almost all of its electricity from renewable sources, with 80 percent coming from hydropower. Costa Rica can power itself for months at a time drawing solely on renewables, running for a record 300 days on clean sources in 2017.

So when it comes to greening its economy, Costa Rica has an enviable head start.

Yet even with this early lead, Costa Rica has struggled to hit its targets. In 2008, it set out to become carbon-neutral by 2021, but the goalposts were then moved back to 2085 in 2015 during the negotiations for the Paris climate agreement.

Now the new administration is restoring the previous goal of carbon neutrality by 2021 and is focusing on transportation, one of the largest contributors to climate change around the world and one of the most difficult sectors to decarbonize. In Costa Rica, transportation accounts for two-thirds of emissions.

Using incentives for cleaner vehicles, particularly electric cars, the government aims to clear the home stretch in decarbonization.

Of course the simplest way to get to carbon neutrality is to limit how much carbon you use to begin with. Cutting off the supply of fossil fuels is one way to do this, but Costa Rica is implementing a much more conventional incentive-driven plan to get the rest of the way to zero net emissions.

Right now, the challenge is that it’s hard to come up with a battery or fuel cell that can outperform gasoline or diesel in cars, trucks, buses, aircraft, and ships. The alternative fuels require chargers or dedicated fueling stations, but Costa Rica is largely starting from scratch.

And as the country’s economy grows, demand for cars is rising. In 2016, there were twice as many cars registered as babies born. More than 60 percent of the country commutes by diesel buses or trains, which provides another opportunity for electrification. The country already ranks second in per capita emissions in Central America.

But in 2016, there were just 107 plug-in electric cars sold in the country. Many Costa Ricans cite the higher price of electric vehicles as the main obstacle.

To drive down costs, Costa Rica is lifting taxes on electric vehicles to encourage their adoption, but 22 percent of Costa Rica’s revenue comes from taxes on fossil fuels, mostly in transportation. That means switching to cleaner cars could throttle the government’s funding stream, further contributing to Costa Rica’s rising deficit.

Other countries are also struggling with how to balance real-world financial constraints with curbing their emissions, but Costa Rica is going further and faster than most, so it’s an important country to watch and learn from in the fight against climate change.