Countries that generate more electricity from wind, solar and other renewable sources will be better protected from global energy shocks, experts say, as escalating conflict in the Middle East disrupts global markets.
The war has escalated since the United States and Israel launched attacks on Iran more than 10 days ago. Critical infrastructure in the region has come under attack and the risk of an Iranian attack has effectively closed the Strait of Hormuz, a vital waterway used to transport 20% of the world’s oil and gas.
The disruption means fuel could be difficult to reach countries that rely on it to generate electricity, heat homes, operate power industries and transport systems. The resulting tight supply is likely to increase prices around the world, increasing pressure on the cost of living.
“Energy is the lifeblood of our society and industry,” said Anthony Froggatt, an aviation, maritime and energy expert at the Brussels-based NGO Transport & Environment. “And we still rely heavily on fossil fuels.”
The world still obtains about 80% of its primary energy from fossil fuels, which are the main contributors to greenhouse gas emissions that cause climate change. President Donald Trump, entering his second term, has also doubled the use of fossil fuels and repealed Biden-era climate regulations aimed at green energy and lower emissions.
Rana Adib, executive director of the 21st Century Renewable Energy Policy Network (REN21), said that dependence makes economies and societies vulnerable to geopolitical shocks.
Countries with a higher proportion of “homegrown” renewable energy in their energy mixes are “less vulnerable to these shocks,” she argued.
Green energy technologies such as wind turbines, solar panels, and batteries, and the rare earths needed to manufacture them, have global supply chains that can be affected by geopolitical tensions and trade disruptions. However, the energy produced by renewables typically comes from within national borders.
“When we bring this technology to each country, the fuel we use will be the sun, wind and local heat,” Adib told DW. “And this is why renewable energy as a solution for energy production is much more resilient to global shocks.”
Iran war exposes world’s dependence on Middle East energy
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Uruguay bets on wind and hydropower
Uruguay’s focus on renewable energy after the 2008 financial crisis was prompted by concerns about its dependence on oil and gas imports.
Twenty years ago, the small South American nation of 3.5 million people embarked on a plan to phase out fossil fuels from its power grid by rapidly expanding wind farms.
Currently, more than 90% of the country’s electricity comes from renewable energy sources, primarily wind, solar, hydropower, and biofuels. In particularly wet and windy years, this number reached 98%.
“This shows that achieving a 100% renewable electricity grid is completely possible,” Adib said, adding that Uruguay was able to achieve it without the large amounts of electricity storage needed when the sun is not shining and the wind is not blowing.
Adib said the transition to green electricity has helped limit Uruguay’s exposure to past energy price increases.
“During the energy crisis related to the Ukraine war, Uruguay’s energy prices remained stable,” Adib said. “This is very important because it means that inflation will not hit the country in the same way as countries that are more dependent on fossil fuel imports.”
Renewable energy advocates argue that if more countries produce their own solar, wind and hydropower, they can protect themselves from oil shocks in the future. Image: VCG/IMAGO
Adib said investments in renewable energy would create 50,000 jobs and save the country $500 million (430 million euros) a year in energy import costs.
Yet Uruguay, like most countries, remains dependent on fossil fuels for transport, operating its industrial sector and heating its homes. We are electrifying public transportation and decarbonizing industry. But completely eliminating fossil energy could take decades.
More power needed to facilitate migration
Another country that has significantly reduced its dependence on fossil fuels is Denmark. The oil crisis of the 1970s hit the small Scandinavian country hard, prompting it to start developing renewable energy early.
Currently, more than 80% of Denmark’s electricity is supplied by green energy, with wind accounting for almost 60% of this, followed by biogas. The country of 6 million people has cut global warming emissions in half since 1990 and hopes to have a fossil fuel-free electricity system by 2030.
The company’s district heating systems, which are connected to more than 65% of homes, will largely eliminate the use of coal and rely on 100% renewable biomethane by 2030.
Froggatt said renewable energy dominating the grid would keep prices down, citing IMF research that found wholesale electricity prices fell by an average of 0.6% for every 1% increase in renewable energy.
“And that’s the normal situation. Obviously, when gas prices are going up significantly, the economic benefits of renewable energy are even higher,” he added.
But he stressed that consumers will only be protected from soaring oil and gas prices if transport, heating, etc. are fully electrified with electric vehicles and heat pumps.
Rising fossil fuel prices and the vulnerability of commodity bottlenecks to supply are expected to make clean energy more competitive and financially attractive, putting pressure on governments to find alternative solutions, analysts said.
Even countries with abundant renewable electricity remain vulnerable to price fluctuations at petrol pumps and home heating. Because they are mainly based on fossil fuels. Image: Frederic J. Brown/AFP
“The current crisis shows once again that if we want more resilient societies and economies, we need to enter an era based on renewable energy and leave behind an era based on fossil fuels,” Adib said.
However, accelerating the deployment of renewable energy to ensure a more stable energy supply requires huge investments and system changes. Green power is currently much cheaper than fossil fuels, but oil and gas are heavily subsidized.
Mr Froggatt said the switch would not only slow climate change but also be about energy security.
“Those two things go hand in hand. So if there’s a positive side to what we’re seeing right now, it’s energy, how we get energy, and energy affordability is going to be on the political agenda,” Froggatt said.
Oil prices soar due to Iran war, hurting consumers
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Editor: Jennifer Collins
