One negative blowback: In Indonesia, expanded use of biofuels, specifically palm oil, could put additional pressure on forests.
Otherwise, big push into renewables, a feared revival of coal seems less and less likely.
The Hormuz crisis has already triggered an electrification drive in south and Southeast Asia as consumers struggle with fuel price spikes and even shortages in some countries. Europe and Asia are accelerating plans to install wind, solar, and battery storage capacity to protect against the highly volatile oil and gas markets in increasingly uncertain geopolitical developments.
Investors overwhelmingly expect financing for renewable energy projects to surge in the wake of the Iran conflict, a new poll by the UK Sustainable Investment and Finance Association (UKSIF) showed last week.
Investment firms managing a total of around $7.4 trillion (£5.5 trillion) in assets under management completed the UKSIF survey last month, which showed 87% of respondents expect both global and UK-specific investment in renewable energy projects to increase following the war.
The survey also showed 78% of respondents felt global renewable energy investments were now “less risky relative to oil and gas” after the outbreak of the war.
“Despite the narrative that LNG can provide energy security through diversifying supply routes beyond fixed natural gas pipelines, in reality, we’ve seen that this has not been the case with all the cards held by a few LNG suppliers,” says Amy Kong, energy transition researcher from Zero Carbon Analytics (ZCA) in a media briefing. “In essence, we’re seeing the same problems with new dealers.”
The consolidation of LNG exporters globally has left many Asian countries particularly exposed to supply shocks. Over 80% of the oil and LNG that transits through the strait is heading for Asian markets, according to the US Energy Information Administration. Four Asian economies – China, India, Japan and South Korea – account for 75% of oil and 59% of LNG flows through the chokepoint. Bangladesh, Pakistan and Taiwan are also among the top destinations for LNG shipped through the vital waterway. Within south-east Asia, Thailand and Singapore are the largest importers of LNG from the Middle East.
A much-discussed “return to coal” by some countries in the wake of the Iran war is likely to be far more limited than thought, amounting to a global rise of no more than 1.8% in coal power output this year.
The new analysis by thinktank Ember, shared exclusively with Carbon Brief, is a “worst-case” scenario and the reality could be even lower.
Separate data shows that, to date, there has been no “return to coal” in 2026.
While some countries, such as Japan, Pakistan and the Philippines, have responded to disrupted gas supplies with plans to increase their coal use, the new analysis shows that these actions will likely result in a “small rise” at most.
In fact, the decline of coal power in some countries and the potential for global electricity demand growth to slow down could mean coal generation continues falling this year.
Experts tell Carbon Brief that “the big story isn’t about a coal comeback” and any increase in coal use is “merely masking a longer-term structural decline”.
Instead, they say clean-energy projects are emerging as more appealing investments during the fossil-fuel driven energy crisis.