Recent analyses reveal that the rapid expansion of solar and wind energy has significantly mitigated the adverse effects of the energy crisis sparked by the conflict between the US and Israel against Iran. The data, released on Wednesday, suggests that rather than a resurgence of coal, it is the burgeoning renewable energy sector that has absorbed the shock of diminished gas supplies caused by the blockade of the Strait of Hormuz. This shift marks a pivotal moment in the global energy landscape.
Renewable Energy Surges Amid Crisis
As tensions escalated in the Middle East, the energy sector faced a substantial upheaval. In March, global fossil fuel power generation experienced a 1 per cent decline compared to the previous year, while solar energy generation soared by an impressive 15 per cent and wind energy by 7.6 per cent. Notably, coal-fired power generation saw a decrease of 3.5 per cent outside of China, with gas-fired generation falling by 4 per cent, according to an analysis by the Centre for Research on Energy and Clean Air. This data underscores a significant shift: no coal plants were reactivated nor any scheduled closures postponed during this period.
In a separate investigation by the energy consultancy Bombay Strategy, which utilised Kpler shipping data, it was found that March coal imports plummeted to their lowest level in five years, dropping 7.6 per cent year-on-year to 102.8 million tonnes. This stark decline contradicts the prevailing narrative of a “coal comeback,” which gained traction after several Asian nations announced measures to extend the operation of coal plants in response to gas shortages.
Asia’s Energy Landscape: A Complex Picture
The energy crisis has had a particularly acute impact on Asia, prompting countries like India, South Korea, and Japan to reactivate coal plants to meet rising energy demands. India urged its coal plants to operate at full capacity, while South Korea lifted restrictions on coal-fired generation, and Japan permitted older facilities to run at maximum output for a limited time. However, Lauri Myllyvirta, the lead analyst at the Centre for Research on Energy and Clean Air, suggests that these measures will have minimal impact. “Coal power plants typically operate at high rates, leaving little room for increased generation in the short term,” he explained.
In fact, the uptick in coal generation in Japan and South Korea largely stems from reduced output from nuclear power facilities, rather than a direct response to the crisis in the Strait of Hormuz. Myllyvirta noted, “The increase in coal generation had nothing to do with the Hormuz crisis but was due to lower operating rates of the two countries’ nuclear fleets.”
Conversely, several nations, including the UK, India, South Africa, Germany, the Netherlands, and Turkey, have successfully met their energy demands through clean energy sources while simultaneously reducing reliance on coal and gas-fired generation.
A Shift in Energy Dynamics
Historically, oil crises have prompted a frantic shift towards coal as a cost-effective alternative. However, the recent data indicates a divergence from this pattern. Following Russia’s invasion of Ukraine in 2022, there was a surge in coal shipments; in stark contrast, the recent blockade resulted in a 2.5 per cent drop in coal shipments within the first two weeks, eventually stabilising at levels slightly above pre-crisis figures.
Hozefa Merchant, the global energy lead at Bombay Strategy, highlighted this significant shift in the global energy response. “Unlike in 2022, where LNG shortages led to panic buying of coal, this time we’ve seen an overall decline in coal volumes,” he noted. “The presence of a more substantial renewable energy capacity has fundamentally altered how the world reacts to energy shortages.”
The world has indeed seen a remarkable increase in renewable energy installations, with over 2,000 gigawatts added between 2022 and 2025. The capacity added in 2025 alone is projected to generate around 1,100 terawatt-hours annually, which is approximately double the electricity that would have been produced by all liquefied natural gas (LNG) passing through Hormuz before the blockade.
The Road Ahead: Accelerating the Clean Energy Transition
Myllyvirta asserts that the impressive growth in global clean energy generation—especially in solar and wind—has played a crucial role in cushioning the impact of the fossil fuel crisis. “The rise in clean electricity has offset the decline in gas-fired generation following the Hormuz blockade, preventing a spike in coal-fired power generation,” he explained. To ensure that such crises do not recur, he advocates for an accelerated transition towards a clean energy future.
Nonetheless, the current crisis has not left the power sector unscathed. Some nations, including China, have experienced a shift back to coal in coastal regions, while countries heavily reliant on LNG, such as Malaysia and the Philippines, have also seen increases in coal imports. Meanwhile, Pakistan experienced a significant rise in coal use, albeit from a low base.
Merchant cautioned that the March data represents just an early indication of ongoing trends. “As this crisis unfolds, circumstances may evolve,” he warned. “However, current indications do not point to a surge in coal demand.”
The future of fossil fuel investments appears bleak, as Myllyvirta points out that new projects require years to become operational. The eventual reopening of the Strait of Hormuz, combined with accelerated clean energy development, could lead to a significant reduction in fossil fuel demand, leaving a global market oversupplied. “A volatile but structurally oversupplied market is a poor foundation for investments,” he concluded.
Why it Matters
The findings from these analyses offer a glimmer of hope amidst an ongoing crisis, highlighting the resilience of renewable energy sources in the face of geopolitical turmoil. As the world grapples with the consequences of energy shortages and shifting political landscapes, the evidence suggests a transformative shift towards cleaner energy is not only possible but necessary. The ability of solar and wind energy to withstand such shocks underscores the urgency for nations to invest in and accelerate their clean energy transitions, paving the way for a more sustainable and resilient global energy future.
