The war in Iran is exposing something the global energy conversation has consistently glossed over. Different countries are approaching the shift away from fossil fuels from entirely different positions, at entirely different speeds, and with entirely different consequences when disruption hits. The crisis has made those differences impossible to ignore.
Economic damage from the disruption has reached well beyond the conflict zone. One of the world’s busiest maritime oil corridors ground to a near halt, sending prices briefly past $119 per barrel. Even though governments coordinated a release of strategic petroleum stocks at a scale without historical precedent, costs still landed hard on households across the globe.
The head of the United Nations noted that no embargo can block sunshine and no missile can strike a wind resource.
Wealthy Gulf exporters found themselves simultaneously profitable and precarious. Higher prices generated revenue while attacks on refining facilities and shipping routes threatened the physical systems through which that revenue flows. Saudi Arabia has publicly committed to deriving half its national electricity from renewables in the coming decades, with its state oil company channeling more than $52 billion into new hydrocarbon infrastructure last year alone.
Their coexistence is deliberate: a hedge built on the expectation that fossil fuel demand will remain strong enough to justify continued investment.
Nations relying on imported fossil fuels are currently living through the crisis on different terms. Even relatively wealthy nations with high revenues have been negatively affected. On the other hand, countries that redirected capital into domestic clean energy generation earlier found that foresight paying off when the global oil ecosystem was disrupted.
Turkey now meets more than half its electricity needs from clean sources, while Morocco and Jordan each made a similar transition within a decade. Fiscal pressure and rising borrowing costs are now constraining the next round of investment for all three.
Another category of nations entered this crisis with no cushion. For instance, Iraq’s electricity system runs on gas from a country now directly involved in the fighting, and its oil revenues now flow through export routes under the same direct threat. The Middle East nation has built almost no alternative generation capacity so far, making it extremely sensitive to market disruptions.
In countries where years of prior conflict already destroyed energy infrastructure, the question is how to prevent total system collapse as global fuel prices rise.
Funda Çebi Yıldız researches energy transitions across the Middle East and North Africa at Harvard University. She has argued that the conflict has settled one debate conclusively. The economic and security arguments for moving away from fossil fuels are no longer theoretical.
However, the practical requirements differ so profoundly from one country to the next in obstacles, capacity and distance traveled that no single framework can contain them. In these difficult times, companies like GeoSolar Technologies Inc. could find unexpected growth opportunities beckoning to them from different markets.
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