• Reuters reports disruption in the Strait of Hormuz has choked off about one-fifth of global oil and LNG shipments.
• The IEA expects renewable power output to rise 8.5% this year, compared with a 1.4% increase in coal generation.
• High fossil fuel prices are accelerating solar and EV adoption, but global power-sector emissions are still expected to reach a record 14.2 billion tonnes.

Six months into the U.S.-Israeli war with Iran, governments across Europe and Asia are accelerating renewable energy investment as fossil fuel supply risks intensify.

Reuters reports that the effective closure of the Strait of Hormuz has disrupted about one-fifth of global oil and liquefied natural gas shipments. Governments from South Korea and Thailand to the European Union have responded with pledges to increase support for renewable energy.

The conflict has added energy security to the case for faster clean power deployment. Yet Reuters reports that the response is not moving uniformly toward lower-carbon energy. Several countries are also increasing coal use to protect electricity supplies.

Renewables surge, but coal also rises

Reuters reports that renewable power generation is climbing worldwide. The International Energy Agency expects renewables to become the world’s largest electricity source for the first time this year.

Rooftop solar has attracted particular interest because systems can be installed relatively quickly and cheaply.

In the Philippines, Reuters says higher electricity prices caused by more expensive imported fuel are pushing households and businesses toward solar. Australia is also experiencing a rooftop resurgence, supported by a battery subsidy scheme.

European demand for rooftop systems has increased since the war began, according to Reuters.

Coal use is rising at the same time. With Hormuz effectively closed and renewables unable to provide round-the-clock power in all markets, coal-fired generation is expected to grow.

The IEA forecasts an 8.5% increase in renewable output this year, compared with a 1.4% rise in coal generation.

In the United States, renewable generation increased 10% in the first half of the year compared with the same period in 2025, Reuters reports.

Emissions remain on an upward path

The increase in renewable generation has not yet produced a decline in global power-sector emissions.

Reuters reports that the IEA expects greenhouse gas emissions to increase 1.1% this year. That would take emissions to an all-time high of 14.2 billion tonnes.

In 2027, the IEA expects coal output to decline 0.7%. Gas-fired power generation is forecast to rise 1.5% from this year’s levels.

Reuters says further progress on climate goals will require greater renewable deployment alongside investment in electricity grids and energy storage.

Asia absorbs the biggest energy shock

Asian economies that depend heavily on oil and gas moving through Hormuz have faced some of the sharpest disruption.

China has leaned heavily into solar. Reuters reports that solar output increased more than three times as quickly as coal between March and July.

India, Vietnam and South Korea moved in the opposite direction and burned more coal. Some European countries also increased coal generation.

The IEA nevertheless expects EU coal generation to resume its decade-long decline in 2026, Reuters reports.

Vietnam’s government said last month that it was considering building additional coal plants to secure energy supplies. That would come despite the country’s 2021 UN climate summit pledge to build no new coal plants after 2030.

RELATED ARTICLE: CIP Launches Perigus Energy With 826 MW European Renewables Platform

High fuel prices accelerate EV adoption

The disruption is also affecting transport, where most global oil consumption is concentrated.

Reuters reports that higher prices, reduced air travel, softer Chinese consumption and faster electric vehicle adoption have weakened transport oil demand compared with forecasts made before the war.

Goldman Sachs estimates gasoline-related demand fell around 20% at the April peak of the disruption. GL Consulting estimates the decline was closer to 15%.

China’s EV export value has exceeded $10 billion for the first time this year, according to Reuters.

Electric models accounted for 63% of Chinese passenger-car retail sales in June, up from 53% a year earlier. BofA analysts estimate electrification accounts for roughly one-third of China’s year-to-date decline in crude imports.

Reuters also reports that EV sales have risen across Europe since the conflict began as higher oil prices increase costs for drivers.

Energy security reshapes investment decisions

Reuters says continued disruption in Hormuz could strengthen the economic case for domestically produced renewable energy. Yet financing costs and future fossil fuel supply remain important variables.

“Changing a nation’s energy mix requires investments, and higher interest rates will make the considerable upfront capital required for renewables and power grids more expensive. Thus, while the present conflict is likely to ultimately favour decarbonization, it is not a one-way street,” said Sverre Alvik, vice president and energy transition outlook director at DNV.

Reuters reports that substantial additional U.S. LNG supply is expected to enter the market between 2026 and 2030. That could eventually reduce pressure on import-dependent Asian economies.

“As this supply materialises, LNG should become more affordable for import-dependent Asian markets, reducing the incentive for a permanent shift away from gas driven solely by the current conflict,” said Victor del Carpio Neyra, senior research associate at Aurora Energy Research.

For governments, companies and investors, Reuters’ reporting shows how energy security is becoming increasingly intertwined with transition investment. Whether today’s disruption produces a lasting shift will depend on financing, grid capacity, storage and the future availability of fossil fuels.