The Iran conflict is a wake-up call, but which economies are ready to build resilient renewables-led systems? Who can show the world how it’s done?
We checked in with Sam Kimmins, our Director of Energy, to talk renewables leadership in Asia, politicised debates, and why the investment in better systems suddenly looks very small compared to the cost of increasingly regular fossil fuel shocks.
Sam, Asia has been a fast mover in the shift to clean energy. Now the Iran conflict has exposed the extent to which the region is still deeply reliant on oil and gas from the Middle East. What are some of the initial lessons from this conflict?
This has been (yet another) wake-up call. While renewable energy leader China is increasingly buffered by their fleet of home-grown renewables and electric vehicles, other Asian nations, such as Japan and Korea, sourcing 87% and 81% of their energy from imported fossil fuels respectively, remain highly vulnerable.
Smaller and developing economies, who have less bargaining power in the scramble to secure constrained supply, are impacting most heavily.
So “renewables = energy security” has never felt truer?
That’s absolutely right. The investment required to build resilient renewables-led systems suddenly looks very small in comparison to the cost of these increasingly regular fossil fuel shocks.
It's time for nations to step up their transition.
Outside of Asia, we’re already seeing hard economic numbers about how the cost of this crisis compares to the cost of transitioning to renewables, with the UK’s Climate Change Commission calculating that the cost of one fossil fuel price shock could exceed the entire investment needed to achieve net zero.
Over time, the conflict will provide very clear data on how other economies are saving because of their investments in renewables, and how much they can insulate themselves from future market shocks through investing in home-grown renewables.
And yet, very few countries have figured this out to the extent that they are effectively buffered, let alone fully powering themselves through a renewables-led system.
Across Asia, India has seen the fastest renewable growth for a large economy, after China. Vietnam and Indonesia are also seeing rapid policy-led expansion in manufacturing and installation of renewables. Perhaps most notable is Pakistan’s remarkable bottom-up solar revolution – an almost entirely market-led surge in solar and battery storage installations by households and businesses.
Despite their rapid progress, these economies still haven’t scaled renewables or EV adoption enough to significantly cut dependence on imported LNG and oil. Could the current fuel crisis be a turning point?
Let’s be frank – transitioning any major system is complex, whether that’s horses to cars, analogue to digital, etc. But the energy transition does appear to be uniquely politicised, and many countries are being held back by misinformation and distortion.
For example, in Japan’s renewable electricity debate, powerful fossil fuel-aligned interests are promoting scepticism toward rapid renewable expansion, while amplifying fears of dependence on Chinese technologies. In parallel, these interests push doomed alternatives – such as hydrogen vehicles – framed as patriotic solutions, diverting attention from proven, scalable EVs and renewables.
Which other narratives are being driven?
Across Southeast Asia, fossil fuel interests continue to shape public and political discourse by promoting narratives that cast renewables as unreliable and ill-suited to local energy systems. These narratives often stress energy security fears, despite mounting evidence that fossil fuel dependence itself exposes countries to price shocks and geopolitical risks.
Reports show coal, oil, and gas industries maintain a powerful foothold and actively influence policy debates, reinforcing the idea that fossil fuels are the only stable option and positioning gas as a so called “transition fuel,” even as renewables become increasingly competitive.
Readers in the UK will recognise this pattern…
In the UK, renewed calls for more North Sea fossil fuel extraction – split sharply along party lines – willfully ignore the facts it would take years to become productive, and that the very limited remaining reserves will be extremely costly to extract. Yet this marginal option is generating a political storm and pulling attention away from real solutions.
The irony of prescribing more fossil fuels as the solution to a crisis caused by reliance on fossil fuels is apparently lost on many commentators.
Instead, we should be talking about oven-ready, cost-effective solutions that can be deployed at scale in the short term. Renewables can be up and running in six months, a year – with every megawatt of installed capacity reducing our dependence on expensive fossil fuel imports.
It’s all right on our fingertips.
Back to Asia, who’s leading the way right now?
I’ve mentioned China, which is already on a turbo-boosted drive towards renewables and EVs as part of very long-term strategy based on reducing reliance and exposure to the Strait of Hormuz, and we’ve looked at Vietnam and Pakistan.
South Korea, where our leading global renewables initiative RE100 has been working with business and government for some years, has confirmed a 100GW renewables target for 2030. Indonesia has also announced a 100GW renewable ambition. That’s two of the world's twelve largest energy users betting on rapid renewables expansion.
We’re also seeing a massive increase in interest in RE100 in countries like Malaysia, Thailand, Indonesia, where companies are buying their own renewables, at scale. Those companies are pouring billions of dollars of investment into installations, because cheap, reliable renewables make business sense.
If the current conflict is driving countries towards renewables, it’s also making it harder to deploy them – because geopolitical upheaval scrambles supply chains and oil is also a key ingredient for making much of the technology that underpins the transition.
This shock is affecting everything. Food prices are going up because the cost of producing fertilizers is going to skyrocket. The cost of transport, using fossil-powered ships, will skyrocket. This is increasing the cost-of-living crisis in many parts of the world, particularly in countries that have very low leverage over oil and gas prices.
No-one wins from increased transport costs, but let’s be clear, renewables are not specifically disadvantaged – clean tech doesn’t have a ‘Straits of Hormuz’ problem. So yes, it may cost more to get your solar panel from central China to your roof in South Africa, but that transport price rise will also be felt by the oil and gas shipments that currently make up a third of global shipping.
Given how cheap renewables really are right now, it would take a lot for the economics to make the leap from affordable to unaffordable.
Where does all this leave companies, like our RE100 members?
More than 400 companies have now joined RE100 – more than 200 of these from Asia – committing to source 100% renewable electricity. Long before this current fossil fuel crisis, they were already making this shift because it delivered strong business value.
Today, that business case is even more compelling. According to IEEFA, at current LNG prices, the levelised cost of electricity from gas-fired power is currently 3–4 times higher than the global average cost of solar and wind. Gas-fired power is already uncompetitive with solar plus storage in many Asian markets.
How will this change corporate behaviour?
In the near-term, we’re likely to see a sharp rise in onsite solar and battery energy storage installations, as organisations of all sizes look for fast, practical ways to hedge against sudden price spikes. Utility scale renewable power purchase agreements (PPAs) will take longer to appear in market data, but given soaring LNG prices, it’s reasonable to expect that combined renewables-plus-storage PPA structures will be an easier sell to even the most cautious Finance Director.
If the price of oil and gas stays high, we will not only see the short-term reactions, but more structural shifts in corporate energy decision-making.
Of course, we cannot ignore the possibility of a broader financial downturn, in which monetary tightening could restrict the capital investment needed for companies to accelerate their shift toward renewable energy. We can but hope that such headwinds will not obscure the fundamental long term economic rationale underpinning the transition.
Will the world start seeing a smart, renewables-led energy systems as the only solid and sensible choice?
In the long term, the transition is inevitable.
In the near term, however, people need clear, tangible demonstrations of success for this to become real for them – particularly to counter the fear based narratives still promoted by parts of the fossil fuel lobby. Encouragingly, countries such as Australia, Texas, and Spain continue to reshape the landscape with high levels of renewable integration, while smaller economies like Ethiopia are accelerating their shift to clean electrification. China stands out at a clear leader, although its progress is often viewed through a more complex geopolitical lens.
The real opportunity – and the story the world is waiting for – will come from the next Asian economy that chooses to lead boldly and show, through action, what a thriving renewable future truly looks like.
Sam Kimmins is Climate Group’s Director of Energy. Amid geopolitical shifts and upheaval, the Climate Group Asia Action Summit, on 21 May in Singapore, will convene forward-looking leaders from business, government and civil society to chart new pathways for solutions as this dynamic region is driving vital transitions across energy, transport and industry.