CERAWEEK-Iran war seen boosting renewable energy investment with focus on security, not climate

By Georgina McCartney, Stephanie Kelly and Arathy Somasekhar

HOUSTON, March 26 (Reuters) - Energy security concerns that once limited investment in renewable energy could now accelerate its development more than worries about climate change, executives said at the CERAWeek conference in Houston, as oil and gas supplies face a fresh wave of uncertainty due to the war with Iran.

The U.S.-Israeli war on Iran has removed millions of barrels per day of oil from the global market, driving energy prices to multi-year highs and causing fuel shortages in countries reliant on oil and gas flowing through the Strait of Hormuz.

The current Middle East conflict is the second major disruption to energy markets in four years, following Russia's invasion of Ukraine in 2022, and spiking oil prices could push a swing to renewables as the more reliable option.

Renewable energy, such as wind and solar power, can be produced from local and regional sources, while oil and gas are more subject to global markets and trade.

"The lesson of recent years is that price matters. ... Wind plus solar plus batteries is becoming an increasingly compelling economic offer, and countries are pursuing it not as a climate objective but for economic energy access, and ironically increasingly as an energy security option," Geoffrey Pyatt, former assistant secretary of state for energy resources, said at the conference.

Energy shortages could occur in late April or May if the war in Iran does not end, Germany's Federal Minister for Economic and Energy Affairs Katherina Reiche said this week, adding that phasing out nuclear energy was a huge mistake.

In France, nuclear makes up around 44% of the power generation mix, according to the International Energy Agency, something energy executives say gives it more security around its power supply.

"France has (among) the lowest carbon footprints of any country in the world, and didn't get there because it wanted to save the planet. It got there to prevent precisely what is happening," said Jeff Currie, chief strategy officer of Energy Pathways at Carlyle, referring to energy supply concerns amid the Iran war.

"One of the biggest predictions you can make out of what's currently happening is it's going to turbocharge the energy transition," Currie said.

Soaring oil prices feed expectations that demand may fall. If that lasts and people's habits begin to change, they may buy an electric vehicle or choose to work from home, said Karim Fawaz, S&P Global Energy director of global refining and product markets. "This is less likely to be reversible," he added.

Around a fifth of the world's energy flows through the Strait of Hormuz, the chokepoint in the Middle East Gulf. Iranian attacks have also hit refineries, gas plants and export terminals in Saudi Arabia, Kuwait, Qatar, the United Arab Emirates and Bahrain, further tightening supplies.

'NEED TO BE SECURE'

While shifting away from Russian gas since its invasion of Ukraine in 2022, the European Union has ramped up investments in clean energy sources such as electrification, nuclear power, renewables, interconnectors and storage, European Commission Director General of Energy Ditte Juul Jørgensen said this week.

"That is what we need to be secure, to be less dependent on these volatile and risky global markets," she added.

Lithuania, in the Baltic region of Europe, plans to have 60% of its power needs generated by renewables this year, up from 50% in 2025, said Lithuanian Energy Minister Žygimantas Vaičiūnas.

There must be investment in wind, solar and hydrogen as there is "no way" the European Union would increase Russian gas imports, the EU's ambassador to the U.S., Jovita Neliupšienė, said this week.

Material disruption to energy supplies has been more acute during the Iran war this year, compared with after Russia's invasion of Ukraine in 2022, speakers also said.

"Diversity of supply needs to be solved at country level, and it makes sense for countries to look into how they can diversify and at the same time have energy security, affordable energy and also sustainable energy," Equinor CEO Anders Opedal told Reuters in an interview on Tuesday.