The dark political side of US economic sanctions: An overview of renewable energy production in developing countries

Alfred Michel Nandnaba

Energy, 2025, vol. 335, issue C

Abstract: With intensifying geopolitical tensions and the expanded use of economic sanctions, understanding their unintended consequences for the global energy transition is critical to both climate diplomacy and effective governance. This paper quantifies the causal impact of US-imposed sanctions on renewable energy production (REP) in 102 developing countries between 1990 and 2021. Employing Entropy Balancing to control for selection bias by adjusting the weights of the observations to balance the covariates between sanctioned and non-sanctioned countries, we isolate sanctions' effect from pre-existing economic and institutional differences. Our core finding is that US sanctions lower REP by roughly 12 % relative to non-sanctioned peers, with effects persisting up to five years. Results hold under alternative specifications, samples, and estimation techniques, including models that capture spillovers and dynamic responses. We further document heterogeneity by sanction type (trade vs. financial), energy source (solar, wind, hydro), and macroeconomic conditions. Crucially, we identify three transmission channels, escalated geopolitical and policy uncertainty, deepened recessions and poverty, and disrupted technology transfer, that underlie this decline. By demonstrating how sanctions can undermine the deployment of clean energy, our study contributes to climate diplomacy debates on coordinating foreign policy and climate objectives, and offers practical guidance for global governance: sanctions regimes should incorporate ’green carve-outs’, safeguard technology flows, and deploy complementary financial tools to support sanctioned states’ renewable transitions.

Keywords: Economic sanctions; Renewable energy transition; Developing countries; Sanction mechanisms; Entropy balancing (search for similar items in EconPapers)
JEL-codes: C01 F36 F51 O11 Q43 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:335:y:2025:i:c:s0360544225037041

DOI: 10.1016/j.energy.2025.138062

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