Middle East crisis accelerates momentum for renewables, new report says

An asphalt concrete production plant in Incheon remains idle amid ongoing disruptions in the supply of asphalt raw materials caused by the conflict in the Middle East, Wednesday. Yonhap

Rising energy insecurity following a major military escalation in the Middle East has bolstered the strategic case for renewable energy, even as deep structural hurdles threaten to stall a rapid transition, a new report warns.

The analysis, released by the Korea Institute for Industrial Economics and Trade, arrives as global oil and gas markets reel from a Feb. 28 strike by the United States and Israel on Iran. The subsequent closure of the Strait of Hormuz has sent price volatility soaring, forcing a reassessment of energy dependence in Korea and beyond.

The report, titled “Will the Middle East war accelerate the transition to renewable energy,” said the crisis has elevated renewables from a climate policy priority to a core pillar of energy security and national resilience.

But it said multiple structural constraints are likely to slow any immediate shift.

Rising fossil fuel prices are increasing the cost burden of renewable energy investments and straining supply chains, creating what the report describes as a paradox. In the short term, countries may turn to alternative fossil fuels rather than renewables to stabilize supply, it said.

At the same time, soaring electricity demand driven by artificial intelligence investment is forcing governments and companies to prioritize securing power supply over choosing cleaner energy sources, the report said.

Additional bottlenecks — including constrained supplies of critical minerals and the high cost of integrating renewables into existing power systems — are compounding the challenge, it said.

To overcome these barriers, the report outlined three priorities. It said governments must secure long-term investment stability through mechanisms such as contracts for difference and fixed-price agreements, while accelerating infrastructure development, including power grids.

It also said that the expansion of renewable energy has largely added to total energy consumption rather than replacing fossil fuels, underscoring the need to reduce demand and curb fossil fuel use to achieve a meaningful transition.

Separately, it said countries should strengthen resource diplomacy, expand stockpiles and diversify supply chains to mitigate energy security risks, while maintaining stable fossil fuel supplies throughout the transition.

This article was published with the assistance of generative AI and edited by The Korea Times.