Climate Crunch: The coming war for climate

The coming war for climate

The hope is that the Middle East conflict is short-lived. But it’s already casting a long shadow on global economic growth and energy flows—and climate goals.

With much of the oil-and-gas rich region engulfed in the crisis, major European and Asian importers are scrambling to secure alternative fossil fuel supplies. Solar and wind may be “intermittent” power sources, but oil and gas are now facing challenges of their own. The question for both energy-rich and option-poor policymakers is how to make urgent short-term decisions—without undermining long-term climate implications.

Here is what’s at stake…

For Canada: Big decisions, high stakes

Safe-harbour Superpower. Nervous nations have come calling, says Tim Hodgson, Minister of Energy and Natural Resources, looking for politically neutral Canadian oil and gas. Bonus: Canadian hydrocarbons don’t pass through global flashpoints—but do face domestic logistical hurdles. Can Canada ramp up as a reliable supplier without compromising its climate goals?

Investors are already testing the waters. The temptation is to build new West Coast LNG terminals and oil pipelines, and even East Coast projects to power Europe. Newfoundland Labrador recently reached a deal with Equinor and BP p.l.c. to lay the ground for construction and production at the offshore $14-billion Bay du Nord project. The oil pipeline route formerly known as Keystone XL—and now called the Prairie Connector—is all being revived. These projects could trigger an economic growth spurt—most certainly they would raise emissions.

Provincial considerations. British Columbia and Quebec must now navigate the tension between their strict environmental mandates and the pressure of allowing new energy infrastructure through their territories. Alberta, on the other hand, would need to ensure it does not over-index on oil and gas investments amid uncertain global energy demand.

For Europe: A power reset?

Continental drift. The 40% surge inEuropeanLNG prices following the strike on Iran highlighted the economic bloc’s limited options. With the continent still scarred by the loss of Russian pipeline gas, the current Middle Eastern shock has fractured the EU’s green consensus. Italy’s recent move to suspend carbon pricing—and Germany’s quiet recalibration of the 20-year-old Emissions Trading System (ETS)—signals a pivot toward security first over climate first.

Power with strings attached. As Qatari LNG through the Strait of Hormuz dries up, Europe is facing a short-term gas crisis, with Italy, Belgium and Poland more exposed than others. While U.S. LNG is bridging the gap, this reliance is increasingly transactional, coming with “political strings” that complicate the transatlantic alliance. Faced with a complete Russian gas embargo and a supply chain for renewables that remains dangerously concentrated in China, Europe finds itself in a strategic deadlock: return to legacy coal, pay the American premium, or accelerate a transition fuelled by China.

For Asia: Wake-up call

The Electrostate Paradox: China’s energy security is currently defined by a stark contradiction. As the destination for 38% of all oil transiting the Strait of Hormuz, Beijing has much lose from Middle Eastern volatility—a vulnerability compounded by the loss of Venezuelan crude following the ouster of the Maduro regime earlier this year. While Beijing recently issued a cautious 15th Five-Year Plan—lowering its carbon intensity target to 17% to prioritize industrial stability—this retreat masks a deeper shift. As Jason Bordoff, director of the Centre on Global Energy Policy at Columbia University, argues, by absorbing the short-term costs of fossil fuel disruptions today, China is effectively clearing the path to consolidate its dominance as the world’s first true “Electrostate.”

India’s dilemma. Even before the recent destabilization in the Middle East, New Delhi signalled a significant appetite for Canadian energy, with High Commissioner Dinesh Patnaik affirming India’s readiness to absorb “whatever Canada is offering.” While India maintains deep-rooted ties with Middle East nations, the vulnerability of the Strait of Hormuz—which handles nearly 15% of India’s crude imports—has accelerated a long-standing diversification mandate. For India, the crisis could simultaneously trigger higher coal consumption, more Western LNG exports, but also focus on powering up sola, and other renewable energies.

The Asian pivot. Roughly 37% of the oil transiting the Strait is destined for South Korea, Japan, and other regional hubs—a dependency that is forcing a radical strategic recalibration. Rather than waiting for Middle Eastern tensions to stabilize, South Korea is leveraging the volatility as a catalyst. The country’s president framed the crisis as “a good opportunity to swiftly and extensively transition to renewable energy.”

It’s unclear whether fossil fuels or renewables will emerge as winners from the latest cataclysmic conflict. What’s certain, however, is that the global race to secure energy supplies has intensified.