Economic concerns drive nations to renewables

As global decarbonization efforts intensify, the idea of a ‘just transition’ has gained widespread attention, especially in emerging and developing nations moving away from fossil fuels. This shift is increasingly driven by economic and energy security concerns rather than solely by emissions targets.

Global and national emissions targets are considered the primary catalysts for the energy transition, requiring climate policies to harmonize environmental and social goals. Yet decarbonization doesn’t always arise from a structured emissions-cutting path.

With renewable costs steadily declining, numerous emerging and developing nations now regard phasing out fossil fuels as vital for economic survival and energy security. For instance, Ethiopia halted petrol and diesel vehicle imports outright in January 2024.

This action stood out because it was presented not as a climate pledge, but as a strategy to cut its yearly fossil-fuel import expenditure exceeding $5 billion, a substantial portion of the nation’s limited foreign-currency reserves. Given Ethiopia’s construction of Africa’s largest hydroelectric dam, staying reliant on costly fuel imports for transport made little economic sense.

Chinese electric cars quickly filled the market void left by the ban; Addis Ababa’s streets now brim with BYD vehicles. Tax breaks and import duty exemptions for EVs, alongside rising prices for second-hand internal-combustion-engine vehicles, spurred this consumer behavior shift.

The Grand Ethiopian Renaissance Dam, inaugurated in September 2025, generates sufficient excess hydropower to operate these EVs at low cost. Importantly, economic and energy-security priorities, not a formal emissions-reduction framework, drove this swift decarbonization.

A comparable trend appears in Pakistan. The nation’s rapid solar adoption stemmed from disruptive opportunities rather than green advocacy or a national climate plan. A devastating 2022 flood submerged around one-third of the country, causing over $30 billion in economic harm.

Rising energy expenses necessitated a diesel-generation alternative. Meanwhile, China offered surplus solar panels at reduced prices, while US import restrictions limited options. Pakistan capitalized on China’s discounted panels to rapidly adopt renewable generation.

Between December 2021 and December 2025, the share of Pakistan’s electricity generated by solar increased five-fold. As a late mover confronting unique energy-security challenges, Pakistan benefited from cost advantages created by global trade.

South Africa has long pursued an emissions-reduction trajectory, yet an affordability crisis ultimately spurred widespread decarbonization. These nations are moving away from fossil fuels due to mounting economic and energy pressures, not solely emissions cuts.

Lower-income households represent a smaller portion of the approximately eight gigawatts of rooftop solar installed in South Africa, due to high initial costs. Crisis-driven decarbonization still demands initiatives to enhance affordability and ensure inclusive participation in the energy transition.