In the wake of the escalating conflict between the US and Iran, a new report reveals that solar and wind energy have played a critical role in shielding the world from the most severe repercussions of the resulting energy crisis. This data counters the narrative of a resurgence in coal usage, suggesting that the rapid expansion of renewable energy sources has effectively absorbed the shock of diminished gas supplies from the strategically vital Strait of Hormuz.
Solar and Wind Power Surge Amidst Crisis
Recent analyses indicate that while gas-fired power generation faced significant declines due to the blockade of the Strait of Hormuz, renewable energy sources have surged to fill the void. Data from the Centre for Research on Energy and Clean Air (CREA) shows a 15 per cent increase in solar energy generation and a 7.6 per cent rise in wind energy production in March. In stark contrast, global fossil fuel power generation fell by one per cent year-on-year, with coal-fired power generation outside China decreasing by 3.5 per cent and gas-fired generation dropping by four per cent.
Lauri Myllyvirta, CREA’s lead analyst, highlighted the limited impact of measures taken by certain nations to return to coal. He noted that coal plants typically operate at maximum capacity, leaving little room for significant increases in output. “The measures announced by Japan and Korea would at most increase coal-fired power generation by 1-2 per cent for a limited period,” Myllyvirta explained.
A Different Response to Energy Shortages
Despite fears of a “coal comeback” following the energy shortfall from the Middle East, the data tells a different story. While countries like India, South Korea, and Japan have made headlines for activating additional coal capacity, these actions are largely a temporary response rather than a fundamental shift in energy strategy.
In March, global coal imports dropped to their lowest levels in five years, falling approximately 7.6 per cent year-on-year to 102.8 million tonnes, according to an analysis by the energy consultancy Bombay Strategy. This decline underlines a significant deviation from historical patterns where oil crises led to a rush towards coal as a cheaper alternative.
Hozefa Merchant, global energy lead at Bombay Strategy, remarked, “Coal trade volumes tell a very different story of how the world is reacting to LNG shortages compared to predictions made by the coal lobby.” He noted that the current situation contrasts sharply with the panic buying of coal seen during the initial stages of the Russia-Ukraine conflict, highlighting the enhanced capacity of renewable energy sources.
The Impact of Increased Renewable Capacity
The structural shifts in the energy landscape are attributed to the remarkable growth in renewable energy capacity since the last major crisis. Between 2022 and 2025, the world added over 2,000 gigawatts of renewable energy, with 2025 alone estimated to yield around 1,100 terawatt-hours annually—equivalent to double the electricity that would have been generated by liquefied natural gas (LNG) in transit through the Strait of Hormuz before the blockade.
The data exemplifies how the rise of clean energy generation has mitigated the impact of the fossil fuel crisis, preventing a surge in coal-fired power generation. Myllyvirta urged that this moment should be seized to accelerate the global energy transition, asserting, “To mitigate the effects of the current crisis and make such recurring global emergencies a thing of the past, it’s essential to use this moment to accelerate the global energy transition.”
However, the crisis has not left power sectors untouched. Regions such as China have seen a shift from gas to coal, albeit limited by the small share that gas holds in their overall electricity generation. Countries like Malaysia and the Philippines recorded increases in coal imports, seeking cheaper alternatives amid soaring LNG prices.
Looking Ahead: The Future of Energy Investment
As the situation develops, Merchant cautioned that the March data merely reflects an early stage of the ongoing crisis. “Things may change, but so far, there is no surge in coal demand,” he stated. Moreover, the current structural landscape presents challenges for new fossil fuel investments. The time required to develop new fossil fuel projects, coupled with the anticipated reopening of the Strait, suggests that the market may become oversupplied as clean energy solutions continue to gain traction.
Myllyvirta concluded, “A volatile but structurally oversupplied market is a terrible basis for investments.” This sentiment resonates with the pressing need for a shift towards sustainable energy solutions, underscoring the importance of continuing to invest in and expand renewable energy initiatives.
Why it Matters
The unfolding energy crisis serves as a stark reminder of the vulnerabilities within global energy systems and the urgent need for a transition to sustainable energy sources. As renewable energy continues to grow and provide resilience against geopolitical disruptions, it underscores a vital shift in how nations respond to energy shortages. The findings highlight not just the immediate benefits of clean energy but also the long-term imperative to accelerate investments in renewables, ensuring a more stable and sustainable energy future for generations to come.
