Renewables wake-up call
Oil and gas war disruptions strain countries that failed to embrace shift
A cook prepares food over a charcoal stove March 11 at a restaurant in Mumbai, India, amid a shortage of liquefied petroleum gas.
Wind turbines operate March 22, 2024, in a solar farm near Weifang in eastern China's Shandong province.
A worker stacks single solar cells Aug. 21 at a ReNew manufacturing plant on the outskirts of Jaipur, India.
Students leave Dhaka University in Bangladesh on March 9 after the government ordered all universities to close as part of emergency measures to conserve electricity.
ENERGY
The war in Iran exposed the world's reliance on fragile fossil fuel routes, lending urgency to calls to hasten the shift to renewable energy.
Fighting all but halted oil exports through the Strait of Hormuz, which carries about a fifth of the world's oil and liquefied natural gas, or LNG. The disruption jolted energy markets, pushed up prices and strained import-dependent economies.
Asia, where most of the oil was headed, was hit hardest but the disruptions also strain Europe, where policymakers seek ways to cut energy demand, and Africa, which braced for rising fuel costs and inflation.
Renewable power is now competitive with fossil fuels in many places. More than 90% of new renewable power projects worldwide in 2024 were cheaper than fossil-fuel alternatives, according to the International Renewable Energy Agency.
Oil is used in many industries beyond generating electricity, such as fertilizer and plastics production, so most countries feel the effects. Those with more renewable power are more insulated, since renewables rely on domestic resources like sun and wind — not imported fuels.
"These crises regularly occur," said James Bowen of the Australia-based consultancy, ReMap Research. "They are a feature, not a bug, of a fossil fuel-based energy system."
Some buffers
China and India, the world's two most populous countries, face the same challenge of generating enough electricity to power growth for more than a billion people. Both expanded renewable energy, but China did so on a far larger scale despite its continued reliance on coal-fired power.
China leads the world in renewables. About one in 10 cars in China are electric, the International Energy Agency found. It's still the world's largest importer of crude oil and the biggest buyer of Iranian oil, but electrifying parts of its economy with renewables reduced its reliance on imports.
Without that shift, China would be "far more vulnerable to supply and price shocks," said Lauri Myllyvirta of the Center for Research on Energy and Clean Air. China also can rely on reserves built when prices were low, and shift between using coal and oil as fuel in factories, he said.
India also expanded its use of clean energy, especially solar power, but more slowly and with less government support for manufacturing renewable energy equipment and connecting solar to its power grid.
After Russia's invasion of Ukraine in 2022, India prioritized energy security by buying discounted Russian oil and boosting coal production. It also ramped up solar and wind, helping to cushion supply disruptions but not avoid them, said Duttatreya Das of the think tank Ember.
India faces a shortage of cooking gas, which drove a rush to buy induction cooktops and raised fears of restaurant shutdowns. Fertilizers and ceramics industries also may be hit.
Fossil fuels fallback
In 2022, some European governments tried to cut dependence on fossil fuels. However, many soon focused on finding new fossil fuel suppliers instead, said Pauline Heinrichs, who studies climate and energy at King's College London.
Germany rushed to build LNG terminals to replace Russian gas with mostly American fuel while the energy transition, including efforts to cut demand, slowed, she said.
Europe's excess spending on fossil fuels since the Russia-Ukraine War amounted to about 40% of the investment needed to transition its power system to clean energy, according to a 2023 study.
In import-dependent Japan, policy responses to past shocks focused on diversifying fossil fuel imports rather than investing in domestic renewables, said Ayumi Fukakusa of Friends of the Earth Japan.
Solar and wind make up just 11% of Japan's energy production, on a par with India but behind China's 18%, Ember said.
Japan's energy use is much lower than both nations.
The Iran war led the agenda during Japanese Prime Minister Sanae Takaichi's March 19 meeting with U.S. President Donald Trump. Trump, who long urged Japan to buy more American LNG, called on allied nations like Japan to "step up" in assisting secure The Strait of Hormuz.
South Korean President Lee Jae-myung said the crisis could be "a good opportunity" to shift faster to renewable energy.
Poor countries
Poorer nations in Asia and Africa compete with wealthy European and Asian countries and big buyers like India and China for limited gas supplies, pushing up prices.
Import-dependent economies — such as Benin and Zambia in Africa and Bangladesh and Thailand in Asia — could face some of the biggest shocks. Costly fuel makes transport and food more expensive, and many countries have limited foreign-exchange reserves, restricting their ability to pay for imports if prices stay high.
Africa may be especially exposed because many countries rely on imported oil to run their transport and supply chains.
It makes strategic sense for African countries to build their long-term energy security by investing in cleaner energy, said Kennedy Mbeva, a research associate at the Center for the Study of Existential Risk at the University of Cambridge.
However, not all opt for renewables: South Africa is considering building an LNG import terminal and new gasfired power plants.
Others — such as Ethiopia, which banned gasoline and diesel fueled cars in 2024 to promote electric vehicles — doubled down on renewables.
The real challenge is not just to withstand the next shock, but to ensure it doesn't "derail the country's development trajectory," said Hanan Hassen, an analyst at Ethiopia's government-linked think tank, the Institute of Foreign Affairs.
Providing a cushion
Increased use of renewable energy helped shield some Asian countries from the energy shock.
Pakistan's solar boom preempted more than $12 billion in fossil fuel imports since 2020 and could save another $6.3 billion in 2026 at current prices, according to think tanks Renewables First and the Center for Research on Energy and Clean Air.
Vietnam's solar generation will help save hundreds of millions of dollars in potential coal and gas imports in the coming year, based on current high prices, according to the research group, Zero Carbon Analytics.
Other countries stretch tight supplies. Bangladesh closed universities to save electricity. It has limited storage capacity to absorb supply shocks, so the government started rationing fuel after a flurry of panic buying at filling stations, said Khondaker Golam Moazzem, an economist with the Center for Policy Dialogue in Dhaka.
For now, governments must just manage shortages and control prices. Thailand suspended petroleum exports, boosted its gas production and began to draw on reserves.
Thailand's finite reserves and limited budget for subsidies mean prices will shoot higher, warned Areeporn Asawinpongphan, a research fellow with the Thailand Development Research Institute.
"The time for promoting domestic renewables should have happened a long time ago," she said.
"These crises regularly occur. They are a feature, not a bug, of a fossil fuel-based energy system."
James Bowen, ReMap Research
