Geopolitical Conflict Accelerates Global Transition to Renewable Energy
The ongoing conflict in the Middle East, initiated on 28 February with US and Israeli strikes in Iran, has significantly impacted global energy markets and policy directions. As a result, 23 countries across five continents have publicly announced measures to boost renewable energy deployment and accelerate electrification efforts. These nations include Saudi Arabia, Argentina, Australia, Austria, Canada, Cambodia, China, South Korea, Egypt, United Arab Emirates, Ethiopia, Philippines, Indonesia, Jordan, Malaysia, Moldova, Netherlands, Pakistan, United Kingdom, São Tomé and Príncipe, Taiwan, Tunisia, and Vietnam. These commitments are driven by the heightened geopolitical tensions and concern over energy security.
Investment trends reflect this shift, with clean energy exchange-traded funds ETFs surpassing traditional oil and gas funds since the start of the conflict. BloombergNEF reports that global investment in energy transition reached a record USD 2.3 trillion in 2025, an 8 percent increase over the previous year. This surge is driven by the realisation of vulnerabilities in fossil fuel supply chains and the increased attractiveness of renewable energy sources.
Recent policy actions exemplify this momentum. For instance, the UK government introduced legal measures requiring new homes in England to be equipped with heat pumps and solar panels. Similarly, Indonesia has committed to deploying 100 gigawatts of solar power within three years, while the Philippines announced accelerated renewable and storage installations totalling 1.47 gigawatts by April. These developments underscore a global realisation that renewable energy offers greater resilience against geopolitical disruptions.
Financial indicators reinforce this trend. US-based clean energy ETFs attracted over USD 3 billion in April 2026, marking the highest monthly inflow since January 2021. Meanwhile, Norway s sovereign wealth fund plans to increase investments in renewable infrastructure to at least 1 percent of its assets by 2030, reflecting growing confidence among institutional investors in the long-term viability of renewables.
Geopolitical turmoil, such as the disruption of the Strait of Hormuz and rising oil prices, has heightened market uncertainties. US President Donald Trump s statement suggesting the Iran conflict could end soon caused mixed signals in energy markets. However, the broader realisation that fossil fuel supply chains remain vulnerable has provided a structural boost to the renewable sector. Investors are increasingly favouring renewable assets for both security and sustainability reasons.
Multilateral banks are also prioritising renewable investments. A recent ODI Global survey revealed that 79 percent of officials in developing countries preferred investing in solar photovoltaic projects, alongside hydropower and wind. Between 2021 and 2024, global financing for clean electricity grew at an average annual rate of 32 percent, reaching USD 25.6 billion in 2024.
Furthermore, investor sentiment, as gauged by Climate Opinion Research Exchange (CORE), shows increased confidence in the short-term profitability of renewables. A March 2026 survey indicates that 14 percent of investors now regard renewables as the most profitable sector over a year, up from 9 percent previously. There is some divergence in opinions about natural gas, with Asian investors showing a declining view on its role as a transitional fuel.
Overall, the Iran conflict appears to be catalysing a fundamental shift in the energy landscape, with the potential to reshape investment priorities and accelerate the global transition towards renewable energy and greater energy security.