Six months of conflict between the United States, Israel and Iran have pushed European and Asian governments to accelerate renewable energy buildout, reducing reliance on fossil fuel imports and injecting fresh momentum into the global energy transition.

With the Strait of Hormuz effectively closed, disrupting shipments of a fifth of the world's oil and LNG, governments from South Korea and Thailand to the European Union have pledged increased funding for renewable energy.

Clean power to overtake coal

The International Energy Agency (IEA) expects renewables to become the world's largest source of electricity this year for the first time, forecasting output growth of 8.5%, far outpacing coal-fired generation growth of 1.4%.

Rooftop solar has proven particularly attractive since the conflict began due to its quick installation and low cost. In the Philippines, rising import fuel prices have pushed households and businesses toward solar; in Australia, battery subsidy programs are driving a rooftop solar revival. European demand for rooftop solar systems has also risen sharply since the conflict started.

In the United States, renewable generation in the first half of the year rose 10% from the same period in 2025, despite President Donald Trump's opposition to green energy.

However, coal-fired power generation is also growing alongside the clean energy boom. With the Strait of Hormuz closed, renewables cannot yet guarantee round-the-clock stable supply, and coal-fired output is expected to keep rising.

Asian coal use climbs

Asian economies heavily dependent on oil and gas shipped through the Strait of Hormuz have been hit hardest.

China has pushed solar power aggressively, with solar generation growing more than three times faster than coal between March and July. India, Vietnam and South Korea, by contrast, have increased coal consumption.

Some European countries have also seen higher coal use, though the IEA expects EU coal-fired generation to resume its decade-long decline in 2026.

Last month, Vietnam's government said it was considering building more coal plants to secure power supply, despite its 2021 pledge at the UN climate summit not to build new coal projects after 2030.

Transport sector

Most of the world's oil is consumed as transport fuel for cars, trucks, ships and aircraft. While the conflict has not collapsed this demand, it has reversed the growth trajectory previously expected by forecasters