The war that began when the United States and Israel attacked Iran quickly morphed into a regional conflict. For over 100 days it choked off the export of up to a fifth of the world’s oil and liquefied natural gas (LNG), until the MOU between the US and Iran was signed on June 14. The terms of this agreement are vague, and the two sides differed on what had been agreed to. For example, Trump declared the Strait unconditionally opened while Iran’s state media news reported that the Strait would be opened within 30 days under “Iranian arrangements”.
As this article is being written on June 27, unimpeded shipping through the Strait of Hormuz has not resumed and intermittent hostilities continue to threaten the fragile cease-fire. But what’s clear already is that energy security, the uninterrupted availability of affordable energy, is being prioritized throughout the world and is reshaping oil and gas markets globally. Increasingly, nations and consumers are focusing on ensuring their energy sovereignty by producing energy within their borders.
This has Important implications for the major projects Canada should support. Advocates touting the advantages of mining and exporting Canada’s LNG, such as Pierre Poilievre and Francois Poirier, CEO of TC Energy Corp, are wrong. Even if one puts aside the almost unimaginable consequences of climate change and catastrophic harms to human health from burning fossil fuels, the economics of green technologies and the importance of energy sovereignty undercut the argument that nations will import fossil fuels. And the argument that Canada’s LNG can be reliably exported ignores the numerous, ominous threats of Pres. Trump to annex Canada and how he pressured Europe and Asia into long term contracts to purchase more US fossil fuels.
Recent history
Insight into how nations around the world will react to the current conflict in Iran can be gained by examining the EU’s response after the Russian invasion of Ukraine and the dramatic reduction in natural gas from Russia to the EU.
As shown in the Figure below, after the invasion on February 24, 2022, the EU accelerated its use of wind and solar for electricity generation and reduced its reliance on fossil fuels.
*Ember content is released under a Creative Commons Attribution Licence (CC-BY-4.0)
The EU response demonstrates how quickly nations can respond when their economic and energy security is threatened, especially now that wind and solar generation are cost competitive and can be rapidly deployed domestically. The current war in Iran, Russia’s ongoing war in Ukraine, and the weaponization of oil and gas by Presidents Putin and Trump have surely increased the risks of relying on imports of oil and gas. Energy and economic security are both enhanced when nations deploy wind, solar and other sources of energy from within their borders.
Wind and solar dominated global electricity growth in 2025 while fossil fuel generation declined.
Since the invasion of Ukraine in 2022, wind, solar, and related technologies have continued to improve and costs have declined. Ember, an energy thinktank, reported that clean power growth exceeded the total rise in global electricity demand in 2025. Solar and, to a lesser extent, wind, met most of that increase. In fairness, natural gas also grew, but only 1/18th as much as solar energy.
The use of batteries also grew quickly because they can dispatch electricity flexibly, an important advantage, especially now that solar and wind are being added to the grid. Their costs have declined dramatically. According to Bloomberg NEF, the cost of stationary battery storage packs plummeted by 45% in 2025. According to Ember, the combination of solar with low-cost batteries now makes it “cheaper and faster to build solar farms with stationary batteries than to build a new gas powerplant, particularly in countries reliant on expensive LNG imports.”
Production and deployment of green technologies is expected to grow in 2026. Of the USD 3.4 trillion investment planned in the energy sector globally, USD 2.2 trillion will go into renewables, grids, storage, efficiency, and electrification, and USD 1.2 trillion to fossil fuels, according to the International Energy Agency (IEA).
This is bad news for groups who argue that Canada needs to build pipelines to export oil and LNG.
Growth of green technologies in Asia will further reduce LNG demand.
China began to invest heavily in renewable energy technologies about two decades ago to reduce its dependence on fossil fuels and increase its energy sovereignty. These investments have paid off. China’s aggressive manufacture and deployment of green technologies within its border, and its exports abroad have reduced its dependence on oil and gas and made China a global leader in these new technologies.
The costs of green technologies will continue to decline. In a widely cited article, scholars at Oxford University forecast future technology costs based on how these costs have decreased in the past. Their paper showed that the “prices of fossil fuels are volatile, but after adjusting for inflation prices are very similar to what they were 140 years ago… In contrast, for the past several decades the cost of solar PV, wind, and batteries have dropped… at a rate of 10% per year.”
China’s historical emphasis on energy security coupled with its rapid deployment of inexpensive green technologies has kept its share of natural gas to the electricity mix stable at about 3% between 2015 and 2025 despite China’s rapid growth in electricity demand.
India lags China in its energy transition but increasingly relies on clean technologies. Its use of solar has grown from less than half of one percent to 9% of India’s electricity generation in less than a decade, and it has rapidly expanded its manufacturing of clean technologies such as solar cells and EVs, especially in two and three wheelers. And despite increased electricity demand, gas contributes a declining share of electricity generation.
In Pakistan, individuals rapidly installed PV solar panels on homes, businesses, and farmers replaced diesel generators with PV solar to irrigate their crops from groundwater. In just a few years installation of low-cost solar panels, frequently coupled with lithium-ion batteries, has transformed Pakistan from a negligible user of solar power to an estimated 20% of its electricity by 2026.
As these examples illustrate, the declining costs of widely available green technologies and the increased importance of energy security have enabled emerging countries to electrify their economies without increased reliance on LNG.
War in the Gulf will jumpstart deployment of renewables and reduce need for fossil fuels.
Fatih Birol, Executive Director of the IEA, recently stated that “one of the responses to this crisis (the conflict in Iran) will be an acceleration of renewables.” Although the full impact of the war in Iran on the energy sector will only become apparent in the future, we are already seeing an explosion of exports from China. In the one month after the beginning of the Gulf War, lithium-ion battery exports grew by 34%, EVs by 53%, and solar cells by 80%.
How Canada should respond
Although the ongoing hostilities in the Middle East may be winding down, many experts estimate it will take years to repair the many oil and gas facilities damaged by the conflict in the Gulf region, and it remains highly uncertain when the unimpeded export of oil and LNG through the Strait of Hormuz will be restored. But even before the conflict in the Gulf, credible estimates made in 2025 by the IEA projected that oil and natural gas demand would peak in 2030 and 2035 respectively, leading to lower prices as producers compete for smaller pieces of a shrinking fossil fuel pie.
The Canadian fossil fuel sector’s hope that new pipelines will be constructed from Alberta to British Columbia or an East-West pipeline with LNG terminals to export fossil fuels to Europe and Asia are dimming. New pipelines and LNG terminals take a decade to build and several decades to pay for. Meanwhile nations will enhance their energy sovereignty by accelerating their transition from oil and gas to increasingly lower-priced green technologies.
The governments of Canada and its provinces should not be pushed into making a commitment to the construction of oil and gas pipelines that would be paid for by Canadians, cost billions of dollars and likely result in stranded assets. This money should be spent on nation-building projects such as modernizing its electricity grid, increasing its deployment of clean energy, and battery storage to prepare Canada for the 21st century.
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Norman Park is chair of the SCAN! Education Committee and Professor Emeritus in Psychology at York University.