War-Driven Renewable Surge Hits 8.5% as Coal and Emissions Also Rise

For the climate and energy sector, the Strait of Hormuz shock is a stress test that has rapidly changed near-term investment logic. Rooftop solar is being deployed as a quick, cheap hedge in the Philippines, Australia and Europe, while governments from South Korea to the EU pledge fresh renewables funding. The critical question is whether this security-driven surge can outpace the simultaneous coal rebound and record emissions.

Six months after the U.S.-Israeli war with Iran began, the energy shock from the effective closure of the Strait of Hormuz has become a powerful accelerant for renewable energy deployment in Europe and Asia, even as it simultaneously props up coal and pushes emissions to a record. Reuters reporting from Brussels, London and Singapore shows governments from South Korea and Thailand to the European Union pledging new renewables funding after roughly a fifth of the world's oil and LNG shipments were cut off. The IEA now expects renewable power to become the world's top electricity source for the first time in 2026, with output jumping 8.5% while coal grows only 1.4%. That headline is a milestone, but it obscures a more complicated reality: the same war that is speeding clean energy is also extending the life of the most carbon-intensive fuel, because renewables cannot yet guarantee round-the-clock power. The IEA projects 2026 greenhouse gas emissions will rise 1.1% to an all-time high of 14.2 billion tonnes.

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The IEA now expects renewable power to become the world's top electricity source for the first time in 2026, with output jumping 8.5% while coal grows only 1.4%.

The most visible market response is in rooftop solar. Because it is quick and cheap to install, rooftop solar has become the preferred resilience tool for households and businesses facing high power prices driven by costlier imported fuel. In the Philippines, those high prices are pushing households and businesses onto solar; in Australia, a battery subsidy scheme is fueling a rooftop resurgence; and European demand for rooftop systems has also jumped since the war began. This pattern matters because it shows the transition being driven by distributed, consumer-led investment rather than only utility-scale projects—an important shift for energy security and grid planning. It also suggests that rooftop solar may help reduce exposure to import price volatility even before larger grid-scale projects are completed.

The United States is a notable counterpoint. Despite President Donald Trump's opposition to green energy, U.S. renewable generation still rose 10% in the first half of 2026 compared with the same period in 2025. That growth suggests market economics and state-level policies are outrunning federal hostility, but it also underscores the uneven pace of the transition. In the near term, the Strait of Hormuz closure and the absence of reliable renewables have forced some grids to fall back on coal. The IEA expects coal-fired generation to grow 1.4% this year, even as renewable output surges 8.5%—a gap that highlights both progress and the persistent challenge of baseload power. For climate-watchers, the U.S. data point is significant because it shows that even an administration actively opposed to green energy cannot stop the economics of renewable deployment.