The role of policy capacity in energy transitions: the case of the Brazilian wind energy sector

This article examines how analytical, operational, and political capacities shape policy instrument design, using Brazil's wind energy policy as a case study. While prior research has often focused on political capacity, we apply the Policy Capacity Framework to show that improvements in a broader range of capacities correspond to shifts in policy design – from administratively priced feed-in tariffs to competitive auctions. Theoretically, we advance the framework by specifying the mechanisms of this co-evolution: early capacity limitations led to simple instruments, while capacity enhancement enabled the adoption of more sophisticated tools like auctions. Moreover, we find that policy design can foster capacity-building, creating feedback loops that enable future policy innovation. Our findings on the Brazilian case demonstrate that the interaction of capacities is crucial for renewable energy policy and highlight how policy design can create feedback loops for sustained innovation, offering lessons for other late-developing countries.