Energy Shocks and the Clean Energy Transition
What effect did the 2022 Ukraine War energy crisis have on the trajectory of the renewable energy transition in Latin America? Did the volatility of the oil market push governments to solidify their energy security in renewable sources, or did oil exporters see a chance for increased revenues from taking advantage of new demand in the market (Cárdenas et al. 2022)? Were these forces mitigated by existing renewable energy policies? What might this mean for the impacts of the most recent energy crisis stemming from the war in Iran?
At first glace, it looks like the trajectory of renewable energy investment growth in Colombia and Brazil were disrupted in 2022, when the Ukraine War energy crisis shocked global energy markets. When these numbers are examined alongside each country’s oil exports, the pictures becomes more complicated, as oil exports followed similar trajectories as renewable energy investments. This suggests that these different sides of the energy sector were instead following larger global macroeconomic trends together: a strong upwards trajectory in the post-COVID boom, followed by a perfect storm of global financial market shocks (Guénette at al. 2022) and the 2021-2023 Latin American inflation crisis (Medina and Wlasuik 2024). Ultimately, it seems that domestic political environments and regulatory frameworks might have an important conditioning effect the impacts an international energy crisis has on the distribution of resources between oil and renewable energy markets.
In fact, the divergent paths taken by the two sectors on the tail end of each graph might be more telling of the importance of domestic policy for the fate of the renewable energy market amidst an energy crisis. In the Colombian case, we see renewable energy investment take a strong rebound in 2023 while oil exports began to drop, likely reflecting Gustavo Petro’s push to ban all new oil and mining agreements (Schroder 2026), and the existing incentive framework for renewable energy investment. In the Brazilian case, we see renewable energy continue on a downward trajectory following 2022, but oil exports growing. Brazil is one of the world’s largest oil exporters (and the largest in the region), and its oil production is set to hit peak in the coming years (IEA 2025). Although privatization of the renewable energy sector led to a boom in investments (Langevin 2022; Montalvão 2026), power grid bottlenecks and demand challenges have caused curtailment and financial losses in the sector (International Trade Administration 2026).
These findings suggest that the fate of the renewable energy transition in Latin America amidst a new energy crisis from the war in Iran depends on the nature of a country’s domestic renewable energy regulatory environment.
References
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Cárdenas, Mauricio, Juan Carlos Jobet, and Luisa Palacios. 2022. “Implications of the Russian War in Ukraine on Latin America’s Energy Sector.” Center on Global Energy Policy at Columbia University SIPA | CGEP, April 27. https://www.energypolicy.columbia.edu/publications/implications-russian-war-ukraine-latin-america-s-energy-sector/.
Guenette, Justin Damien, Philip George Kenworthy, and Collette Mari Wheeler. 2022. Implications of the War in Ukraine for the Global Economy. Washington, DC: World Bank. https://doi.org/10.1596/37372.
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