Energy trade-offs: What’s prompted the global shift towards renewables over fossil fuels?

But then came the war in Iran, a global curve ball that’s bound to change our collective future in unpredictable ways. In the face of yet another energy crisis—just four years after the one sparked by Russia’s invasion of Ukraine—the question of whether clean energy’s upward trajectory will be among the disruptions is an urgent one.

While these types of shocks strengthen the case for renewables, which offer both secure supply and stable prices, they also tend to create fiscal conditions—rising inflation, higher interest rates, supply chain disruptions—that aren’t exactly conducive to the investment required to fund new clean energy projects.

So, which forces will win out? History can be instructive.

The two oil shocks of the 1970s, precipitated by the Yom Kippur war in 1973 and the Iranian Revolution in 1979, spurred the first push towards energy efficiency.

The US, for example, introduced a national maximum speed limit and Americans lost their taste for huge gas-guzzlers. Other nations were spurred on to explore alternative domestic sources: Denmark decided to pursue wind power, while France constructed 50 nuclear reactors in a decade.

Yes, the world remained hooked on hydrocarbons, but the crises started something important.

The 2022 price spike, caused by Russia’s invasion of Ukraine, may have been the first energy shock where the security benefits of renewables were truly appreciated.

Countries took steps to double down on the transition, committing more funds to renewables and electrification—though it wasn’t all clear skies. High interest rates hit the wind sector particularly hard, leading to supply chain bottlenecks, cancelled projects and job cuts. But, as in the 70s, the ultimate result was progress.

Two reports published last week show that, before the war in Iran started, those seeds were starting to bloom. The International Energy Agency’s global energy review found that solar power was particularly strong—the energy sector’s largest single source of growth in 2025—and that new renewable installations rose to a record capacity of 800 gigawatts.

Think tank Ember, meanwhile, reported that clean sources met all of the growth in energy demand last year. And in an important, if symbolic, shift, renewables overtook coal in the global electricity mix, with coal falling to below a third of global generation for the first time in history.

The main driver of this growth is, simply, costs.

Consider Pakistan, where energy shortages and a struggling grid led to a surge in people installing their own rooftop solar panels. As a result, the country avoided importing about $12 billion-worth of oil and gas between 2021 and early 2026, according to analysis by the think tank Centre for Research on Energy and Clean Air (CREA) and energy consultancy Renewables First; if the war in Iran keeps prices elevated, it could save estimated additional $6.3 billion by the end of the year.

Though Asia has felt the brunt of the price impact, Europe has also suffered, especially in terms of jet fuel and diesel.

On Wednesday, European Commission President Ursula Von Der Leyen said that the EU’s fossil-fuel imports bill had increased by more than €27 billion ($32 billion) in just 60 days. Throughout the continent, countries that have made the most progress with clean energy sources, such as France and Spain, are patting themselves on the back as their electricity prices are expected to remain relatively low even if the conflict persists and drives up gas prices.

But while you might think such evidence would supercharge renewable growth, the war is also throwing up fresh obstacles. Manufacturers of clean tech will feel the closure of the Strait of Hormuz in their supply chains. Key ingredients in producing clean energy metals such as nickel, copper, cobalt and lithium are transported through the waterway, as are raw materials for solar panels. Expect price increases and shortages.

The economic toll of the war could mean countries need to cut spending currently earmarked for climate investment in order to support their residents through a fuel and food crisis.

If interest rates rise again, as they did in 2022, capital intensive wind and solar developments could be in danger; a study from the University of Oxford’s Smith School found that increased financing costs have a greater negative impact on the cost-competitiveness of renewables than fossil-fuel projects.

That said, things feel different than they did in previous crises—I credit a shift in our psychologies. As environmentalist Bill McKibben wrote at the start of April: “The world between our ears has changed, decisively, in the direction of renewable power from the sun and wind.” Fossil fuels used to be thought of as reliable and cheap—in any weather, at any time of day, you could start an engine or light a match and get power, heat, light.

Now, we’re starting to understand that hydrocarbon dependence is no longer a reliable way to grow an economy. Recalling the 2022 energy shock, Nic Fulghum, senior data analyst at Ember, told me: “People don’t want to go through these high inflation periods every four years.”

Polling supports this. A March survey conducted by Cluster17 for POLITICO found that people overwhelmingly support shifting to renewables, with 39% saying Europe should accelerate the transition even if energy costs rise in the short term. Just 17% said the EU should prioritize price over environmental impact.

In sensible countries, there’s suddenly a huge political appetite for clean energy. At the end of March, South Korea’s President Lee Jae Myung announced in a speech that the nation’s “future would be at serious risk” if it continued relying on fossil fuels. The government followed that up a week later with an accelerated rollout of renewables which sees one of the world’s largest importers of oil, natural gas and coal deploying 100 GW of clean energy by 2030.

In August, Indonesia announced that it would build 100 GW of solar power. In April, President Prabowo Subianto called for the programme’s execution to be ramped up, with the aim of reducing diesel-generated power by 10 GW this year.

In a speech last week, Ed Miliband, the UK’s energy security and net zero secretary, declared: “The era of fossil fuel security is over, and the era of clean energy security must come of age.” He’s right. ©Bloomberg

The author is a Bloomberg Opinion columnist covering climate change.