Iran Energy Crisis: Accelerating or Overshadowing Clean Energy Industrial Strategy?
Our experts share their views
Ongoing conflict in Iran and the wider Middle East is triggering an unprecedented energy crisis around the world. And as we begin to see what the contours of a ceasefire may look like, prices remain volatile and countries face an uncertain energy future.
We asked our network of industrial strategy experts what kinds of clean energy industrial strategy this energy crisis has highlighted the need for, how they could be accelerated or overshadowed by this moment, and what kind of moves they want to see from policymakers. A selection of responses are below.
A long tail of recovery
By Sarah Ladislaw, Founding Director, The New Energy Industrial Strategy (NEIS) Center
Oil and gas supply and demand shocks have increased in frequency and severity since the original disruptions of the 1970s, but countries have, by and large, grown more resilient. Every energy supply shock teaches important lessons for policymakers, companies, investors, and citizens—about the resilience of our economy, the adaptability of markets, the diversity of the energy system, and the sufficiency of preparedness.
Vulnerabilities that were insufficiently safeguarded resurface, forcing governments to spend limited resources to protect exposed citizens and fragile economies in the short term, often without alleviating those same vulnerabilities. Yet every crisis presents a moment when policymakers and investors can balance near‑term relief with longer‑term resilience. As supply disruptions persist, the need for durable solutions becomes clearer.
Even if a ceasefire holds, the current crisis , has a long tail of recovery, and heightens the need for measures that provide immediate protection while strengthening long‑term resilience and security. OECD governments have collectively released emergency oil stockpiles to calm markets. The United States has relaxed sanctions on Russian and Iranian oil already on the water to boost supply. Countries across Asia, Europe, and elsewhere have limited exports and consumption of critical petroleum products, introduced price relief measures, and temporarily relaxed limits on coal‑fired power generation to ensure adequate and affordable power.
As disruptions persist, these measures will be insufficient to prevent higher oil, natural gas, fertilizer, and other strategic commodity prices, exacerbating inflation, raising debt levels, and slowing economic growth — impacts that will fall hardest on vulnerable countries.
Over the medium to long term, a prolonged disruption or altered security environment could reshape growth trends, global commodity and trade flows, investment decisions, and technology choices.
The good news is that there has never been a better time — with more technologies available than ever— to pursue greater resilience, diversification, efficiency, and a stronger energy system. The challenge is that government budgets are stretched, with competing demands on limited resources.
Governments should, where possible, prioritize investments that advance multiple strategic objectives, including many directly aligned with energy industrial strategy, while enhancing resilience:
Accelerate grid reforms and investment to enable diversification, modernization, and electrification of key sectors, pursued aggressively alongside defense, manufacturing, and technology priorities.
Re‑evaluate the adequacy of strategic oil and gas stockpiles as historical transit routes may become less reliable in a changing security environment.
Strengthen industrial heat electrification and efficiency where cost‑effective solutions exist, ensuring new and expanded manufacturing capacity does not reinforce existing vulnerabilities.
A chance for green molecules
By Oleksiy Tatarenko, Sr. Principal, RMI
The current energy crisis triggered by events in the Persian Gulf has exposed the energy security vulnerabilities of several regions and the interconnectedness and fragility of the fossil-fuel-based global system, which relies on a trade backbone emanating from a few concentrated hubs.
For green molecules, this moment sharpens the case for pursuing a dual strategy with urgency: rapidly scaling domestic production where feasible, while building diversified, trusted import partnerships based on multiple sources of supply. While clean power will be the main lever pulled by many countries to diversify away from fossil-fuel supply, clean molecules like hydrogen and ammonia will become part of the solution for sectors such as fertilizers, chemicals, shipping, and aviation.
Therefore, once most exposed countries have managed the current emergency situation, we expect a renewed push into domestically produced and imported clean molecules and feedstocks, such as hydrogen, ammonia, methanol, and SAF. For example, India, which is currently experiencing disruptions, spiked prices, and elevated risk to fertilizer and ammonia supply from the Middle East due to the current conflict, will most likely further accelerate its efforts to substitute grey ammonia imports with domestically produced green ammonia.
However, over the past few years, since the smaller-scale 2022 energy crisis, what has become clear is that ambition alone does not translate into deployment. Despite strong policy signals, green molecule markets remain immature because supply and demand do not yet meet in a bankable way. The missing piece is coordinated market creation through mechanisms that can de-risk new supply value chains by aligning producers, offtakers, infrastructure, and policymakers across borders. As we argued in our recent work on the India-EU green ammonia trade opportunity, trade corridors can play this role by creating demand visibility, aligning standards, and structuring risk across the value chain. This kind of system-level approach is essential to unlocking final investment decisions and accelerating the deployment of large-scale projects that require tight coordination.
A rethink in Asia
By Jenny Schuch-Page, Managing Principal, The Asia Group
The Iran energy crisis has revived a narrative in Asia that clean energy contributes to energy security and industrial resilience, not just emissions reductions. With countries examining their indigenous energy sourcing options as a path to energy security, nuclear power in particular has received a boost in economies heavily exposed to LNG and oil supply disruptions.
Japan’s renewed emphasis on “domestic energy sources,” Taiwan’s accelerating political debate over nuclear restarts, and Malaysia’s late‑March decision to launch a nuclear feasibility study – explicitly prompted by the Iran shock – all point to a reassessment of nuclear as a stabilizing, domestically anchored clean energy option. While momentum was already building across the region before the crisis, the urgency has elevated nuclear as a nearer term anchor for energy security.
Electrification, particularly in transport, is undergoing a similar reframing across Southeast Asia, given that 80% of the region’s oil imports are used in the road transport sector. While recent EV‑related announcements have accelerated deployment — electrification mandates for public transport fleets, preferential treatment for EVs, tax benefits, and new charging incentives — there is an opportunity now to translate heightened EV interest into domestic industrial growth. Across Southeast Asia, this means identifying policies that anchor local value creation: meaningful demand signals for electric buses, motorcycles, and commercial fleets; coordinated planning for charging infrastructure and grid upgrades; and targeted support for battery and component manufacturing that can realistically be localized.
In nuclear, the comparable challenge is different but parallel — governments are signaling interest, but still lack mechanisms to accelerate licensing, manage political and financial risk, and build durable public confidence around life extensions, restarts, or new builds. The Iran crisis has created political space for both sectors. Whether that space is used to scale domestic capability and long-term resilience amid pressing fiscal demands will determine how this moment shapes the Indo‑Pacific’s energy security future.
Break free of incrementalism
By Simone Tagliapietra, Senior Fellow, Bruegel
The crisis has, above all, highlighted the need for a clean energy industrial strategy centered on faster decoupling from fossil fuel imports through domestic clean electrification. In Europe, that means treating grids, renewables, storage, flexibility, heat pumps, EV charging, industrial electrification, and clean-power purchase frameworks not as separate files, but as one competitiveness-and-security agenda.
This is broadly acknowledged by policymakers: the Commission’s 2025 Clean Industrial Deal explicitly links decarbonization and competitiveness, the December 2025 European Grids Package is meant to speed up grid planning, connections, and investment, and the Commission has announced an Electrification Action Plan for 2026 covering transport, industry, and buildings. But the response still feels too timid relative to the shock Europe is facing. We are still mostly talking about accelerating existing proposals, when what is really needed is a much sharper push at both the EU and national level to electrify industrial processes, transport, and residential heating much faster, and to do so with the same urgency Europe showed during the 2022–2023 gas crisis.
What I would like to see from policymakers, and have not yet seen at the necessary scale, is a full emergency-style electrification package rather than incrementalism. That would include much more aggressive measures to de-risk industrial electrification, mass-market support for heat pumps and building upgrades, faster grid connection, stronger incentives for EVs and charging infrastructure, and public procurement and state-aid frameworks explicitly geared to scaling domestic clean manufacturing alongside deployment. Europe has already shown that crisis can accelerate green substitution: during the gas shock, governments moved quickly because reducing gas demand became a security imperative. The lesson now is the same.
The right industrial strategy is not to double down on alternative fossil supply, but to compress the timeline for clean electrification, because every additional electrified factory, vehicle fleet, or home heating system permanently reduces Europe’s exposure to imported fossil fuels. What is still missing is that same level of political urgency.
A time for demand-side strategy in India
By Rishabh Jain, Fellow, Council on Energy, Environment and Water
India is entering what may be its most consequential phase of energy transition — not on the supply side, where the success of solar and wind is already documented, but on the demand side. The current global energy crisis has widened something India’s policymakers have been quietly acting on: that electrification of end-use is a climate and energy security strategy — and now also an economic one.
Three shifts are converging. Electric two- and three-wheelers crossed 2.1 million sales in CY 2025, driven not by policy preference but by economics — running costs that make the switch a straightforward decision for small business owners and daily commuters. The government’s USD 8 billion PM Surya Ghar scheme aims to solarize ten million homes by 2027, and the next question — what new loads does that solar power? — is already being asked. With over 300 million households still cooking on LPG, more than half of it imported, cooking electrification is emerging as both a household economics story and an energy security one. And in industry, falling renewable tariffs are making direct electrification of thermal processes in textiles, food processing, and ceramics increasingly viable.
India’s supply-side architecture is already being pushed — the USD 4 billion Production Linked Incentives for solar and batteries, the USD 1.7 billion National Critical Mineral Mission, along with various mandates and incentives for EVs. The aim now should be to connect that supply-side support to a demand strategy: cooking electrification at household scale, electrification of small and medium enterprises, and EV charging infrastructure that keeps pace with vehicle adoption. Bilaterally, FTAs and clean energy MoUs — on critical minerals, technology transfer, and manufacturing investment should also be leveraged to create demand in new boundaries and ink new pacts for supply side strengthening. The opportunity is significant — and the policy architecture should be nimble enough to leverage the opportunity this crisis presents.
The stormy weather facing US-UK clean energy coordination
By Josh Freed, Senior Vice President for Climate & Energy, Third Way
The current global energy crisis comes at a difficult moment for US-UK coordination. Trust between these governments is at a modern-era low, and, as ever, we remain two nations separated by a common language. But the UK has an enormous need for clean energy, and the British government is creating multiple pathways for investment. Given the growing tensions over the US war with Iran, it may be up to companies and NGOs on both sides of the Atlantic to foster these opportunities until the political circumstances change.
The UK, along with the rest of Europe, has struggled with an energy cost crisis caused by the double-whammy of COVID supply chain paralysis and Russia’s invasion of Ukraine. Deploying emerging clean energy technology — long-duration storage, small and advanced nuclear power plants, smart grids and transformers, turbines, and more — is their imperative to escape the turbulence. The current British government, including the Departments of Energy Security and Net Zero, and Business and Trade, has built momentum for offshore wind, nuclear energy, and significant energy storage expansion. They also have a new vehicle, the National Wealth Fund, for investment in clean energy and its supply chains.
But the UK lacks capital, an industrial base, and a true clean energy strategy. The energy crisis has gutted the government’s fiscal headroom and increased the cost of capital. There is some offshore wind industrial capacity, and segments of a nuclear supply chain, but not nearly enough to meet the need. To remedy all of this, the government needs to provide much more focus to produce a clear, detailed vision.
The American private sector can offer the investment and technologies to build in the UK, as we highlighted in our US-UK nuclear strategy. They see the potential in this market. But for the foreseeable future, they’ll be on their own. The Trump administration is an erratic partner. On top of tensions over Greenland, NATO, and senseless tariff policies, the US indefinitely paused an advanced technology trade deal because the British government wasn’t meeting its demands to lower food and digital trade barriers. All this before the war in Iran.
To move forward, the British government could clarify its industrial strategy and create pathways for direct engagement by American firms. At the same time, US companies need more sophisticated engagement with the British government at all levels, not just the civil service. It is critical to partner with British companies and engage directly with Ministers, key members of the parliamentary parties, and regional officeholders.
The chilling of the US-UK relationship creates urgent and shared vulnerabilities. As the US government creates headwinds for its clean energy sector, China is eagerly offering itself as a reliable partner. Over the next several years, the UK should provide a clear roadmap of exactly what it wants to build and secure investments for. US corporate leaders need to step into the vacuum left by the current administration. The need for clean energy and the US-UK partnership is as strong as ever. In the short term, the road to get there might look a little different than usual.
Another reality check, will Europe listen?
By Joss Garman, Executive Director, Loom Strategy Centre
The Iran crisis has shown once again, four years after the Ukraine energy shock, that the tools European nations built for a more stable world simply don’t survive contact with these kinds of geopolitical shocks. Europe needs energy financing mechanisms robust enough to withstand interest rate spikes, procurement frameworks that use expanding defense budgets as leverage for domestic industrial capacity, and an honest reckoning with why clean energy supply chain value keeps flowing offshore.
What I haven’t seen is a government willing to set out new strategies built for the new times we are in. Instead, the instinct seems to be to paper over the gap between targets and outcomes and try to defend failing status quo policies even as bills rise, industry declines, and support for climate policies becomes more fragile or unravels. The five principles that should now organize energy policy in European countries — economic strength, sovereignty, affordability, resilience, and national security — are clear, but what’s missing is the political courage to subordinate the old consensus to them.
Endless volatility is no foundation for the future
By Jonas Nahm, Associate Professor at John Hopkins School of Advanced International Studies
Trump came to office convinced that economic interdependence had made America poor and that clean energy was a form of economic self-harm. He has now created the conditions to prove himself wrong on both counts, for everyone, including America.
The closure of the Strait of Hormuz — a chokepoint this administration underestimated — has shown what clean energy advocates argued for years: that fossil fuel dependence, not trade exposure, is the deeper source of economic vulnerability. Whether oil prices stay elevated or fall when the war ends, the lesson will be the same. It is the volatility itself, the lurch from glut to crisis and back, that imposes real costs.
The tariffs have made a parallel point. The problem was never interdependence but the volatility injected into the system by an unpredictable partner. Both lessons point in the same direction. The EU-Australia free trade agreement, concluded last week after eight years of negotiations, zeros out tariffs on wind turbines, solar panels, and batteries from day one — and it is not an accident that it was signed now, part of a broader pattern of trade relationships being quietly reoriented away from Washington. If a new order takes shape, it will be built from what Trump dismantled, and America will find itself outside it, having surrendered the leverage that once came from being at its center.
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