The ongoing US-Iran conflict, which has disrupted significant supplies of oil and liquefied natural gas (LNG) through the Strait of Hormuz, has accelerated the global pivot toward clean energy alternatives. This shift, already underway before recent events, is reflected in a sharp rise in China's export of renewable energy technologies. Between March and June, Chinese shipments of solar panels, components, batteries, and electric vehicles increased by 47 percent in value to $84.9 billion compared to the same period last year.

While the widespread adoption of clean energy technology marks a positive development for climate mitigation efforts, analysts caution that individual and market-driven choices alone will not be sufficient to address the scale of the climate crisis. Government intervention remains crucial for sustained progress, for several key reasons.

Firstly, self-interested investments tend to favor projects with smaller scale and quicker returns, such as rooftop solar panels in Nigeria, heat pumps in Europe, or residential battery storage in Australia. These incremental steps, though important, fall short of transforming the heavy industrial sectors that remain heavily dependent on fossil fuels. So far, only a handful of large-scale clean industry investments have materialized outside China in response to recent fossil fuel disruptions. Notably, the UK-listed company Atome has committed $665 million to build a green ammonia-fertilizer plant in Paraguay, while Sweden’s Stegra secured $1.65 billion to construct a hydrogen-based steel manufacturing facility.

These projects benefit both from favorable local conditions, such as abundant hydropower, and strong policy frameworks including the European Union’s escalating carbon pricing and border adjustment mechanisms. In Atome’s case, financing support came through multilateral institutions like the International Finance Corporation and the Green Climate Fund. The long investment horizons for such ventures—anticipating market signals extending into the 2040s—highlight the critical role of government policies in shaping market expectations beyond immediate energy price fluctuations.

Secondly, the push for energy security is prompting some governments to double down on domestic fossil fuels alongside renewables. India has approved about $4 billion in subsidies to promote coal gasification, while China is advancing coal-to-chemicals projects even as it invests in clean heavy industry. This reflects a broader dynamic where national resilience considerations can counterbalance clean energy ambitions. Moreover, shifts in demand in one country can lead to unintended consequences elsewhere. For instance, China’s growing use of electric vehicles and reduced oil consumption can lower global oil prices, potentially encouraging higher consumption in countries like the United States.

Lastly, experts emphasize that carbon removal technologies must become a central element of the transition to meet international climate goals. Despite rapid emissions cuts, meeting the target of limiting global warming to 2 degrees Celsius will require the removal of gigatonnes of carbon dioxide annually by mid-century—far beyond today’s global capacity of only about 2 megatonnes. Scaling up these technologies represents a global public good that cannot be driven by narrow economic self-interest alone.

In summary, while market forces and geopolitical pressures are currently accelerating the adoption of clean energy, experts agree that coordinated government action will be essential to phase out fossil fuels ultimately and implement carbon removal at scale. Without such intervention, the global transition risks falling short of the requirements to avert the worst impacts of climate change.