Global Energy Strategies Diverge Amid Geopolitical Conflicts and Economic Shocks

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Energy Crossroads: World Splits on Fossil Fuels Amid Global Crisis

A series of recent geopolitical events, including the US-Israel conflict with Iran, have intensified a global divergence in energy strategies.

While some nations continue to prioritize fossil fuel extraction and consumption, others are accelerating investments in renewable energy infrastructure as a means to reduce oil dependence. This divergence is occurring against a backdrop of high oil prices and rising food insecurity.

Economic Context and Global Shocks

The global economy is experiencing significant pressure, with oil prices around $110 a barrel and forecasts from some analysts suggesting a rise to $150. Food prices are increasing due to a fertilizer supply crunch. The World Food Programme USA has warned of record global food insecurity, projecting an additional 45 million people could face acute hunger. Industries including steel and chemicals report shortages and rising costs, and households in various countries are implementing energy-saving measures.

The conflict in Iran represents the third major global shock in six years, following Russia's invasion of Ukraine in 2022 and the Covid-19 pandemic. These events have highlighted the continued reliance of many economies on fossil fuels.

Divergent National Energy Strategies

Analysis of the 10 countries most responsible for greenhouse gas emissions reveals two distinct approaches: some nations remain committed to fossil fuel extraction, while others are pursuing a low-carbon future.

China, the world's largest emitter of greenhouse gases and second-largest economy, is expanding its renewable energy capacity. According to reports, China's emissions have been stable or declining for nearly two years. In 2024 and 2025, China added 360 GW and 430 GW of new solar and wind capacity, respectively. Clean energy contributed a third of China's GDP growth last year, with over $1 trillion invested in clean energy compared to $260 billion in fossil fuels. Green technology now constitutes over 10% of China's export business and overall economy.

The United States, under President Donald Trump, has presented a contrasting approach to energy policy. The Trump administration has prioritized fossil fuel extraction, withdrawing from the Paris Agreement, halting the closure of coal plants, and providing tax incentives for oil and gas. The administration agreed to pay $1 billion to France's Total Energies to halt the building of two offshore windfarms, with the funds designated for oil and gas projects.

Prior to these recent policy shifts, emissions were decreasing, and low-carbon sources generated over half of the country's electricity in March 2025. The green economy received a boost from the Inflation Reduction Act, leading to nearly $500 billion in green economy investments. Some US states, including California and Texas, continue to advance clean technology.

India, the world's most populous nation and fourth-largest economy, has set a new target under the Paris Agreement, aiming for 60% electricity from low-carbon sources by 2035 and a 47% cut in emissions per unit of GDP. India added a record 45 GW of renewable capacity last year, with some forecasts suggesting the 60% target could be met by 2030. India is pursuing a "hybrid developmental path," maintaining fossil fuel use for energy security during economic growth.

Russia, led by Vladimir Putin, has utilized oil and gas as geopolitical tools. As the third-largest global producer, Russia benefits from high oil prices, reportedly gaining an additional $150 million daily during the conflict in Iran. Less than 1% of Russia's power comes from wind and solar, with about a third from aging nuclear plants. Russia's oil and gas infrastructure is known for extensive methane leaks with minimal abatement efforts.

• Germany, a pioneer in renewable energy, retains an attachment to gas and has scaled back low-carbon heating reforms, while some carmakers are revising electric vehicle plans.
• Japan's climate targets have been deemed inadequate by analysts.
• Indonesia, the world's third-largest coal producer, embraced a "just transition" plan in 2021 with $20 billion in promised aid. Efforts to close coal plants faced resistance, and a resurgence in mining occurred due to high coal prices. Significant deforestation for agricultural projects remains a challenge.

The Impact of High Fossil Fuel Prices

Conflicts have revealed that several powerful countries and major emitters benefit from high fossil fuel prices.

• The US oil and gas sector is projected for a $60 billion windfall.
• Russia's economy has been supported by soaring commodity prices.
• Saudi Arabia's Aramco has seen its share price surge.
• Iran's oil revenues have increased despite infrastructure attacks.

During a summit in Beijing, US President Donald Trump and Chinese President Xi Jinping met. Trump stated he secured trade deals to sell US oil, jets, and soybeans to China. China has not confirmed these claims.

Statements from Officials

"We have entered the age of clean energy. Those who lead this transition will lead the global economy of the future."
— UN Secretary-General António Guterres

"Fossil fuel dependency is ripping away national security and sovereignty and replacing it with subservience and rising costs."
— Simon Stiell, UN Climate Chief (March 2025)

John Kerry, former US secretary of state, described electricity as the "holy grail" for future energy systems.

Potential Strategies for Energy Transition

To encourage petrostates to transition, one proposed strategy is to reduce demand for their fossil fuel products. While countries like Saudi Arabia invest in domestic renewable energy, they intend to continue oil exports.

Durwood Zaelke suggests focusing on methane reduction as a critical short-term measure. Satellites can precisely identify methane sources including coalmines, landfills, and leaking infrastructure. High prices incentivize oil and gas companies to capture methane for resale.

Jayati Ghosh, an Indian development economist, argues that effective green technology uptake requires the electrification of transport, subsidies for producers and consumers, creation of charging infrastructure, and increased renewable electricity generation.

Future Outlook

The duration and aftermath of the Iran conflict will influence future global energy trends. The 10 largest emitters, which account for about two-thirds of the world's annual carbon output and include major fossil fuel exporters, will largely determine whether the world moves towards a low-carbon path or deeper into fossil fuel dependence.