The Iran war has had varying effects on the energy transition, with higher fossil fuel prices and energy security concerns supporting renewables and electrification in some markets, while limiting the shift away from fossil fuels in others. This is according to BloombergNEF, which has assessed the impact of the conflict six months after it began. In Europe, renewables now supply 35% of electricity across the five core European power markets, compared with 24% in 2021. This, together with lower electricity demand, has helped reduce the impact of higher gas prices. Germany has responded by increasing onshore wind auction volumes by 12 GW, while BloombergNEF expects other European markets to maintain or increase their renewable energy ambitions.
In the USA, the impact has so far been more limited. Ample domestic natural gas production and fully utilised liquefied natural gas export capacity have kept gas and power prices relatively stable. Higher oil prices have benefited US oil producers and refiners, although they have also contributed to inflation. Higher petrol prices have increased demand for conventional hybrids and used electric vehicles, but the removal of federal purchase subsidies has limited demand for new electric vehicles.
Canada is pursuing a more mixed energy strategy. Electric vehicle sales and clean electrification are accelerating, while the country is also seeking to benefit from higher global demand for oil and gas outside the Middle East. Germany and South Korea have committed to purchasing more Canadian fuel and investing in fuel-production infrastructure. BloombergNEF notes that Canada's efforts to expand oil exports alongside clean power, electric vehicle production, carbon capture and higher carbon prices create a complex transition path, with energy security and economic priorities remaining central.
In Japan and South Korea, the disruption has strengthened the energy security case for renewables. Before the conflict, 90% of Japan's and 70% of South Korea's crude oil supplies passed through the Strait of Hormuz. South Korea has linked the conflict to plans for 100 GW of renewable capacity and more than 20% renewable generation by 2030, alongside investment in grids, storage and electrification.
The Middle East could also see longer-term growth in renewables as countries seek to reduce their dependence on fossil fuels for domestic power generation and limit their exposure to disruptions through the Strait of Hormuz. However, higher borrowing costs caused by the war are weakening clean power project economics in the short term.
Elsewhere, the conflict has accelerated interest in solar in Africa, where imports of Chinese solar equipment increased by 37% in the first half of 2026 compared with the same period in 2025. In China, energy security and the energy transition are increasingly supporting each other, with renewables complementing domestic fossil fuel production and the country continuing to expand its production and exports of clean energy equipment.
Overall, BloombergNEF finds that the war has not produced a uniform global response. In some markets, it has strengthened the case for domestically produced renewable electricity and electrification, while in others, governments and consumers continue to rely on fossil fuels to manage the immediate impact of higher energy prices.
