Everyone Thought the 2026 Energy Crisis Would Speed Up the Shift to Renewables. It Didn’t.

What the US–Israel–Iran war is actually revealing about energy systems, supply chains, and how unprepared we are for real disruption

I’ve been watching how the US–Israel–Iran war is playing out across global energy systems, and more importantly, how people are interpreting it.

Not just the headlines or oil price spikes, but the patterns underneath. The way governments are reacting, the way industries are adjusting, the way everyday life is quietly getting reshaped.

And there is one assumption that keeps showing up everywhere.

That if fossil fuel supply becomes unstable or expensive, the world will naturally accelerate its shift to renewable energy.

It sounds logical. It almost feels inevitable.

But the more I look at what is actually unfolding, the more that assumption starts to feel incomplete.

The crisis is real, but the response is not what people expected

Let’s start with what is actually happening.

The closure of the Strait of Hormuz has disrupted one of the most critical arteries of global energy. Around a fifth of the world’s oil and a large portion of LNG flows through that route, and that disruption is now being felt across regions that depend heavily on imported fuel. (time.com)

Now, in theory, this should push countries faster toward clean energy.

But look at what countries are actually doing.

Across Asia, governments are declaring energy emergencies, cutting workweeks, pushing remote work, reducing operating hours, and asking citizens to actively reduce energy consumption. Not as a climate measure, but as a way to stretch limited fuel supplies. (bbc.com)

At the same time, coal is quietly being used more in some regions to compensate for disrupted LNG, and oil and gas exploration is suddenly becoming attractive again because high prices make previously unviable projects viable. (theguardian.com)

So what you are seeing is not a transition.

It is a system trying to hold itself together.

Now look at Asia, because this is where the stress becomes very visible

If you zoom into Asia, the scale of disruption becomes much more tangible.

The Philippines has declared a national energy emergency.
Thailand, Vietnam, and Indonesia are pushing remote work and conservation policies.
South Korea is running national energy-saving campaigns.
Japan is dealing with concerns about medical supply shortages because petrochemical inputs are getting disrupted.

Governments are asking people to limit air conditioning, reduce travel, and even restructure work weeks just to manage fuel consumption. (bbc.com)

This is not a gradual shift. This is immediate adjustment under pressure.This is not transition behaviour. This is damage control.

Because while governments are asking people to consume less, they are also doubling down on fossil fuels

This is where things start to get uncomfortable. High fossil fuel prices are creating massive profits. And those profits are not just sitting idle. They are flowing back into exploration, extraction, and expansion of fossil fuel infrastructure.

Companies are fast-tracking LNG deals.
Governments are reconsidering domestic fossil fuel production to reduce dependence on imports.
Projects that did not make sense earlier are suddenly back on the table.

There are attempts to tax these windfall profits. But realistically, that does not change the direction of capital fast enough. Because when energy security is under threat, countries do not think in terms of ideal energy mixes. They think in terms of control.

And fossil fuels, despite everything, still offer the fastest way to regain control.

So you end up with a very real contradiction

On one side, you have:

governments urging conservation
climate narratives pushing renewables
public conversations around transition

On the other side, you have:

more drilling
more fossil fuel investments
more infrastructure that could get locked in

Both are happening at the same time.

And this is where the idea that crisis accelerates transition starts to break down. Because crisis does not simplify decisions. It multiplies trade-offs.

Renewables are not insulated from this system

There is also another layer that makes this more complicated.

We often talk about renewables as if they exist outside geopolitical risk. But they don’t.

Solar panels need aluminum.
Batteries need lithium, cobalt, nickel.
Wind turbines depend on rare earth elements.

All of these come from global supply chains. And those supply chains are also being disrupted right now.

The same conflict that is affecting oil flows is also affecting the movement of materials needed to build renewable infrastructure, especially when regions involved are key producers or transit hubs. (theguardian.com)

So while the narrative says “move faster to clean energy,” the reality is that building that future is becoming harder at the same time.

At some point, this stops being an energy issue

If you follow the ripple effects, this stops being about fuel very quickly.

Petrochemicals get affected.
Plastics get affected.
Medical supplies get affected.

There are already concerns in countries like Japan about shortages in syringes, gloves, and dialysis equipment because they depend on petrochemical inputs like naphtha. (bbc.com)

Fishermen and farmers are dealing with rising fuel costs. Industries are slowing down or shutting operations.

So this is not just an energy disruption. It is a cross-sector disruption. Which means this is not just an energy crisis.

It is a systems crisis.

India is one example of a much larger pattern

Even in India, you can see early signs of this stress.

Gas shortages have disrupted industrial clusters like ceramics in Gujarat.
Restaurants and small businesses are adjusting operations.
Households are dealing with uncertainty around LPG availability.

None of this looks dramatic on its own. But taken together, it shows that the system is under pressure.

Policy is reacting, but it is not in control

Another thing that becomes very clear when you track all of this is how policy is responding.

Governments are introducing subsidies, price caps, tax cuts, and conservation measures to protect citizens and businesses. But these are reactive measures.

They are trying to contain the situation, not redesign the system. (cfr.org)

At the same time, political pressures are pushing governments to prioritise short-term affordability over long-term transition goals. (atlanticcouncil.org)

And the situation itself is evolving too fast for policy to keep up. Markets react instantly. People change behaviour immediately. Supply chains adjust within days or weeks.

Policy takes time. So even well-intended interventions end up feeling fragmented.

Markets are moving faster than everything else

If you look at how markets are responding, the pattern is very clear.

High fossil fuel prices are making fossil fuels profitable again. Which means more investment in exploration and infrastructure.

Oil and gas executives are already warning that the scale of disruption is larger than what markets are currently reflecting, and that prices may remain high even if the conflict ends because countries will need to rebuild reserves. (cnbc.com)

So at the exact moment when transition should accelerate, the system is incentivising the opposite.

Even if the war pauses, the system does not reset

There is also this assumption that once the conflict slows down, things will go back to normal. But supply chains do not work like that.

Even now, there is a ceasefire between the US and Iran. And on the surface, that creates a sense of temporary relief. But if you look at it a little more critically, it is hard to fully trust that pause.

Because ceasefires in situations like this are not always about resolution. Sometimes they are about recalibration.

Both sides need time to stabilise, reassess, and very likely restock. And there is a real possibility that what looks like de-escalation is actually a pause before the next phase of escalation.

So even the idea of things settling down starts to feel uncertain. And even if the Strait reopens, the system does not just reset.

There are ships waiting, routes that have been rerouted, infrastructure that has been damaged, insurance costs that have gone up, and supply chains that have already been disrupted.

It takes time to stabilise. In fact, it could take months for global logistics to return to normal even after reopening.

So the disruption outlasts the event. And the uncertainty outlasts the disruption.

What is actually changing underneath all this

If you step back, there is one structural shift that becomes visible.

Countries are starting to realise that depending heavily on a few regions, a few trade routes, and a few geopolitical relationships is not resilience.

It is risk.

The Strait of Hormuz has made that painfully obvious.

So now, there is a growing push towards alternative trade routes, diversified supply chains, new international partnerships, and more self-sufficient systems. More like…plan B, plan C, plan D thinking. Because no country wants to be pushed into survival mode every time something like this happens.

But here is the irony.

You need stability, surplus, and mental bandwidth to build resilience. And right now, most countries do not have that. They are operating in survival mode.

Their resources are stretched.
Their profits are under pressure.
Their policies are focused on immediate damage control.

So while everyone is suddenly aware that the system needs to change, very few are actually in a position to calmly build that change. Instead, what you are seeing is reactive scrambling.

Trying to fix things while being inside the crisis.

Follow Deepa on LinkedIN

The part that is easy to underestimate

What I find interesting is how much of this is still being underplayed.

Which is understandable. No government wants panic. And most people assume things will stabilise in a few months. Maybe they will.

But when you look at the scale of disruption and the way systems are reacting, it becomes clear that we are operating much closer to systemic fragility than we are comfortable admitting.

And once systems move into survival mode, getting back to stability takes time.

The takeaway

At the end of the day, the energy transition was never just about switching from fossil fuels to renewables.

It was about rebuilding supply chains, infrastructure, trade dependencies, and geopolitical relationships.

We just simplified it. This crisis is removing that simplification. And forcing us to deal with the full complexity.

ALL AT ONCE.

Sources

Credits

The article is written by Deepa Sai and edited using AI.

One response to “Everyone Thought the 2026 Energy Crisis Would Speed Up the Shift to Renewables. It Didn’t.”

The Long Game of Venture: Inside a Conversation with Karthik B. Reddy of Blume VC – ecoHQ says:

28th April 2026 at 11:58 pm

[…] Check out my take on how the 2026 geopolitical conflicts have shaped the energy industry. […]