The chief executive of one of the world’s leading renewable energy groups says the Iran war reinforced the need for domestic clean energy but cautions that the jolt provided by the conflict may not endure.
The second shock to global energy markets in five years was a “useful reminder of the importance of having green energy, sovereign energy, local energy, competitive energy”, said Xavier Barbaro, chief executive of Neoen.
The group, now owned by Brookfield, has experience over almost 20 years in building solar and wind farms globally, as well as the biggest batteries in France, Australia and Finland and smaller installations in Japan.
But Barbaro is less certain about how much the latest energy crisis will turbocharge the green rollout “because we saw that [with the war] in Ukraine, after one, two years, let’s say, that the momentum was already fading away a bit”.
“The best thing that we can do is to show that [renewables] are the cheapest source of energy, the fastest one to deploy and the most domestic one in terms of industrial content, and the ability to build additional energy independence,” he added.
On the one hand, the energy crisis has driven some countries to burn more coal, particularly in north-east and south-east Asia, instead of gas. The consultancy Rystad Energy expects Asia-Pacific to burn an extra 150mn tonnes of coal by 2030. The region consumed about 7.26bn tonnes in 2025.
The US and Canada also swiftly increased their fossil fuel production to meet domestic needs and boost exports. Other countries also gave financial support for fossil fuel consumers, including Germany, Brazil and South Korea.
These immediate responses were “broadly going in the wrong direction”, said green scientific non-profit group Climate Action Tracker, as countries implemented flat-rate fuel subsidies, tax cuts and price caps that entrenched dependence on fossil fuels.
On the other hand, however, there has been a surge in consumers installing solar panels and buying electric cars, as well as a domestic battery boom, in many countries from Pakistan to Australia and parts of Africa.
In the first quarter of this year, India added 2.7 gigawatts of rooftop solar capacity, more than double the amount in the previous period, and the US installed almost 1.2GW of residential solar, marking one of the strongest quarters with a 6 per cent lift.
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The International Energy Agency said this week it was working with governments including Thailand, Malaysia and the Philippines on “how to [keep] their oil stocks under the ground for a rainy day”, drawing on the agency’s emergency management expertise.
The Philippines became the second-largest destination for Chinese solar exports in the first four months of the year, while the country also fast-tracked more than 20 large solar, wind and hydro projects in response to the oil and gas market turmoil.
Stientje van Veldhoven, climate and green growth minister in the Netherlands, which recently co-hosted a summit in Colombia on the fossil fuel transition, called on governments to “create the enabling conditions for businesses to electrify by investing in grids, providing the right financial incentives and supporting innovation”.
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Many governments, including the UK, the EU and South Korea, reiterated or increased support for developing more renewable energy, building on momentum which entailed renewables overtaking coal in the power system last year.
More than 50 countries introduced measures to conserve energy and shield consumers, the IEA said.
The bifurcated response was nowhere more evident than in China, where coal power was boosted at the same time as Beijing placed renewable energy, nuclear and the environment as central pillars of its new five-year plan.
Another 25 countries plus the EU have announced clean energy and electrification policies, investments and initiatives, according to the Global Energy Crisis Policy Monitor.
For example, draft texts show the EU is planning to change tax rules to ensure that electricity is taxed at a rate below that of fossil fuels, as part of measures aimed at shifting to a greener energy system. In the UK, the government has pledged to break the influence of gas on electricity prices.
But the effect on Europe has been “less transformative” than after the Ukraine war, said Energy Transitions Commission co-chair Lord Adair Turner.
“I am fairly confident that this [energy crisis] will give at least a small to moderate impetus to the energy transition, particularly in Asia,” Turner said. “Whether it will be a major inflection point, I think it’s too early to tell.”
The crisis prompted some governments to reboot their electric vehicle policies and petrol pump anxiety spurred consumer interest in key markets. In Europe, countries including Germany, Italy, France and the UK benefited from EV subsidies and leasing support.
In developing countries, Cambodia cut import taxes on EVs and hydropower-rich Laos banned the import of internal combustion engines until the end of 2026.
A poll of almost 2,000 businesses around the globe has indicated that companies were rapidly looking to electrify their operations to reduce their exposure to volatile fossil-fuel prices.
A separate survey of investors managing £5.5tn in assets from the UK Sustainable Investment and Finance Association found 87 per cent expected global financing for renewable energy projects to increase.
But the precise impact of the war is hard to untangle and will take years to unfold because investment decisions can take years to come to fruition.
In its latest report on energy investment the IEA said it expected $2.2tn to be funnelled into renewables, nuclear, storage, low-emission fuels, efficiency and electrification this year — roughly double the amount going into fossil fuels.
About three-quarters of anticipated 2026 energy investments were in effect locked in, the IEA report said, based on decisions made well before the conflict began.
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Euan Graham, a senior analyst at Ember, said governments, particularly in south-east Asia, the epicentre of the current supply squeeze, were “reshaping their thinking on security and future energy demand growth”. But he expected the effects to take time, if not many years.
Overall, the IEA said it expects the crisis to lead to renewed interest in domestic energy resources — renewables and nuclear, but potentially also coal.
Energy experts see “electrification” as a crucial part of the shift away from fossil fuels, because the electricity can be supplied by low-carbon sources, and it is far more efficient. However, the voluntary target may not have teeth, while some critics argue it should be more ambitious.
“It is an important moment for climate,” said Brazil’s André Corrêa do Lago, the president of the UN COP30 climate talks, as governments face an “added urgency” to make decisions about their future energy plans.
His Turkish successor at UN COP31, Murat Kurum, has put forward a proposal for countries to set a voluntary goal for electricity to meet 35 per cent of global energy demand by 2035, up from about a fifth.
Turkey is expanding coal-fired power stations. However, it is also rapidly developing wind and solar farms as well as batteries to store the electricity. In April, wind and solar surpassed coal in electricity generation for the first time in its history.
Speaking to the FT, Kurum said that while governments’ “urgent priority is protecting their citizens from spiralling energy prices”, countries that had already invested in renewables were better protected from the fossil-fuel price shock.
“Anybody with rooftop solar or an electric car can feel the benefits in their pocket,” Kurum added.
