Professor‑in‑practice at LSE’s Global School of Sustainability, former BoE chief economist, argues the Iran war could spur a low‑carbon shift. The closure of the Strait of Hormuz has rattled global markets, pushing oil and gas prices higher and pushing net‑importing nations toward domestic renewables and nuclear.

EU solar output surged 24% in 2022 after Russia’s invasion, double previous growth, Ember Energy data shows. Yet countries like China and India—holding 70% of global coal use—may turn to home‑produced coal instead of clean tech, while rare‑earth shortages could slow photovoltaic deployment and limit broader renewable adoption across Asia during this energy crunch today.

Governments face an energy trilemma: secure, affordable, sustainable. Heightened security focus may squeeze fiscal space, diverting funds from capital‑intensive low‑carbon projects toward storage, military, and subsidies. Electrification offers clean benefits but exposes grids to cyber threats and storage limits, forcing a balance between electric vehicle dominance and internal‑combustion resilience to maintain reliable power for all.

BP’s 2025 Energy Outlook predicts a fragmented global energy system: some nations accelerate electrification, others cling to fossil fuels. The Iran crisis could either catalyse rapid low‑carbon adoption in resource‑rich, grid‑ready countries or deepen reliance on coal where political and economic incentives outweigh clean‑tech gains. Investors must weigh these divergent pathways for strategic portfolio decisions.