The Third Gulf War has caused what decades of climate summits tried to avoid: the effective closure of the Strait of Hormuz has erased 20% of the world’s supply of oil and liquefied natural gas (LNG) in one fell swoop. Faced with the imminent threat of a large-scale blackout, governments around the world have put their energy transition plans in a drawer.
However, to keep the lights on and the economy afloat, the immediate response has been to look back to the past: burn coal by the piece and resurrect nuclear power.
The mirage of “bridge fuel.” Asia buys more than 80% of the crude oil and gas that transits through Hormuz, but the problem goes far beyond a simple ship jam. This crisis has destroyed one of the great pillars of the energy transition. As explained The New York TimesLiquefied Natural Gas (LNG) was sold during the last decade as the perfect “bridge fuel”: less polluting than coal, more reliable than intermittent renewables and capable of being transported by sea to any corner.
That bridge just blew up. The damage is far from being repaired, and it is estimated that the infrastructure attacked It will take years to operate again. Added to this is that Iran has turned the Strait of Hormuz into a kind of maritime “VIP discotheque”deciding by hand which ships can cross. No one can depend on LNG ships to guarantee their sovereignty.
The main problem: live without pantry. But there is a technical factor that has turned this crisis into an immediate catastrophe: lack of storage. Unlike the West, most Asian countries lack underground gas stores, leaving them completely exposed to supply disruptions.
While nations like South Korea can last up to 52 days and Japan about three weeks, Taiwan walk on a wire extremely fragile, with a legal security threshold of just 11 or 12 days of reserves. Without a “pantry” to store the LNG, Asia has no room for maneuver: if the ship does not arrive on Monday, the blackout begins on Tuesday. This structural vulnerability is what has forced an unconditional surrender to coal.
Coal’s dirty lifesaver. As Jonathan Teubner, the aforementioned analyst, perfectly summarizes by Financial Times: “No coal ship passes through the Strait of Hormuz.” That is the key to everything. Being a cheap, abundant resource that does not depend on the troubled waters of the Middle East, the most polluting mineral has returned with a bang.
According to FortuneSouth Korea has removed the 80% operational cap for its coal plants, a decision that has drawn the ire of environmental groups who accuse the government of using “energy security as a pretext.” Thailand, for its part, is restarting plants it had dismantled last year.
From Seoul to New Delhi: the dilemma of the powers. Japan, one of the world’s largest gas importers, has also bowed to the evidence, allowing its least efficient coal plants to operate at full capacity for a year. Energy desperation is such that in Japan There are already voices demanding cancel the emissions trading system, calling it a “death sentence” for the coal plants they now need to survive.
In India, the situation is critical. Prime Minister Narendra Modi has warned of a “major challenge” ahead of the summer. To avoid massive blackouts, New Delhi has commanded giants such as Tata Power and Adani Power operate at full capacity, while Bangladesh seeks multi-billion dollar loans. Sam Chua, analyst at Rystad Energy, sums it up in Financial Times: We are not seeing a transition, but a brutal “destruction of gas demand.”
Although it is not that simple: the money wall. This coal revival has a glass ceiling. As experts point out in Japan Timesthe banking sector flatly refuses to finance the construction of new coal plants for fear of being left with “stranded assets” (stranded assets) in the face of global climate commitments. That is, countries are squeezing their dirty old infrastructure to the last drop, but they can’t build new ones. Charcoal is the assisted respirator, but not the cure.
The atom as a shield: the great redemption of uranium. Panic too has broken atomic taboos. Taiwan, whose government promised a “nuclear-free homeland” in 2016, has announced plans to restart two decommissioned reactors. The Philippines has charted a fast track to atomic energy by 2032, and Vietnam has just struck a deal with Russia to build its first reactors. Uranium is no longer seen as a threat, but rather as the only way to protect the electricity supply against maritime blackmail.
The domino effect reaches Europe. What started as an emergency solution in Asia is already infecting the West. The crisis has forced the European Union to break its own historical taboos, admitting that Europe committed a “strategic mistake” by moving away from atomic energy.
Brussels has already put 200 million euros on the table to develop Small Modular Reactors (SMR) by 2030. This shift shows a continental fracture: while France entrenches itself protecting its nuclear investment of 300 billion euros and blocks energy interconnections with the Iberian Peninsula, Europe assumes that it cannot guarantee its future solely with the sun and the wind.
War rationing in the 21st century. While the plants uproot, the daily suffocation hit the streets. Philippines has declared a “national energy emergency.” In South Korea, the government implores families to take short showers and Samsung has prohibited its employees from driving to work based on the license plate. In Thailand, officials operate with work weeks for four days and they are prohibited from wearing ties in order to raise the temperature of the air conditioning. The collapse is so severe that Thai ambulances have taken to Facebook to beg gas stations to reserve diesel for them to save lives.
The collateral damage. The scope of this blockage transcends the electricity bill. If the conflict lasts until June, Bloomberg alert that the barrel could touch $200, a price designed to cause “demand destruction.” This would lock global inflation at a chronic 6%, bringing us closer to a severe recession and, due to fertilizer shortages, a food crisis.
The technological tipping point, however, is Taiwan. The Taiwanese “silicon shield” It is extremely fragile: The island has a legal gas reserve threshold of just 12 days. The TSMC company, which manufactures 90% of the world’s advanced chips – the engine of Artificial Intelligence – alone consumes 9% of the island’s electricity. If in summer high temperatures cause blackouts due to lack of gas, the global technology chain will go into technical shutdown.
Who emerges stronger from this chaos? China. As pointed out FortuneBeijing is remarkably insulated from the shock. Li Shuo, director at the Asia Society Policy Institute, confirm in FT that for China this crisis only cements the idea that coal is “the safe haven of last resort“.
Thanks to a diversified energy mix, 120-day strategic reserves and a “shadow fleet” that avoids the blockade, the Asian giant observes coldly. Its preemptive decision to suspend fuel exports to protect its domestic market has caused a domino effect that is already paralyzing mines in Australia and suspending flights in Vietnam.
The carbon trap in the face of the electric revolution. The great tragedy of this war is not only economic, but climatic. As expert Sharon Seah warns, cited by Fortunethe real danger is “carbon lock-in” (carbon lock-in). Once a state bears the immense sunk costs of reviving a coal plant, political economy makes it nearly impossible to shut it down again.
Paradoxically, survival instinct is achieving what green policies could not accelerate. There is already real evidence: electric vehicle dealers in Southeast Asia reported a sharp increase in orders in March, and Indonesia has promised that all its vehicles will eventually be electric.
We wanted a seamless ecological transition, but geography has imposed the brutal reality of physics on us. Today, the world is willing to burn coal to survive the week. But in the medium term, the terror of being left in the dark could be the real catalyst that accelerates the mass adoption of renewables – as Pakistan did by tripling its solar capacity – and electric vehicles. Not to save the planet, but to ensure that the next conflict in Hormuz does not paralyze our lives again.
Image | Photo by Chris LeBoutillier on Unsplash
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