EDP chief says Middle East war boosting demand for renewable energy

12:00

By: Dakir Madiha

EDP chief says Middle East war boosting demand for renewable energy

The conflict in the Middle East is reshaping the global energy debate as rising oil and gas prices renew calls for a faster transition to renewable power.

As the military confrontation involving the United States, Israel and Iran enters its second week, disruptions to fossil fuel supply chains have prompted energy executives and climate groups to argue that the crisis highlights the strategic value of renewable energy.

Miguel Stilwell de Andrade, chief executive of Portuguese energy company EDP, said the current turmoil underscores the need for diversified energy systems. Speaking to Bloomberg Television, he said renewable sources are less exposed to geopolitical shocks affecting oil and gas markets.

“This highlights the importance of diversification from an energy perspective,” Stilwell de Andrade said. “Renewables are much more protected from these types of external shocks.”

The energy disruption has been significant. Iran’s retaliation following U.S. and Israeli strikes that began on February 28 has effectively closed the Strait of Hormuz, a key shipping route through which roughly 20 percent of global oil and liquefied natural gas normally flows.

The crisis has also affected liquefied natural gas supply. Qatar suspended production at its largest LNG export facility after Iranian drone attacks, a move that Goldman Sachs estimates could temporarily cut global LNG supply by about 19 percent.

European gas prices have already surged more than 50 percent in response to the disruption.

Environmental groups say the situation demonstrates the risks of continued reliance on fossil fuels. Mads Christensen, executive director of Greenpeace International, said the recent decision by OPEC+ to increase oil output by 206,000 barrels per day represents only a temporary response.

“As long as our world runs on oil and gas, our peace, security and wallets will always remain hostage to geopolitics,” Christensen said. He urged policymakers to accelerate efforts to build a more stable energy system based on affordable renewable power.

Energy analysts have drawn comparisons with Europe’s response after Russia’s invasion of Ukraine in 2022. In the years following the crisis, the European Union rapidly expanded wind and solar capacity and invested far more in clean energy than in fossil fuels.

According to the European Investment Bank, Europe ultimately spent roughly ten times more on clean energy than on fossil fuels during that transition.

Frauke Thies, Europe director at Agora Energiewende, said renewable expansion helped cushion the impact of the previous energy crisis.

Despite growing interest in renewables, analysts warn that the transition remains complex. Higher fossil fuel prices can make renewable projects more economically attractive, but they also increase construction and financing costs for new infrastructure.

Elina Pastukhova, a policy expert at the climate think tank E3G, said expanding fossil fuel infrastructure cannot address the underlying instability of the global energy system.

“Volatility remains inherent in a fossil fuel based system,” she said, arguing that higher energy prices strengthen the case for accelerating the shift to renewable sources.

Stilwell de Andrade also warned earlier this year that Europe may be losing the sense of urgency that followed the Ukraine energy crisis. Without sustained political momentum, he said, progress toward a cleaner and more secure energy system could slow.