Iran war may give China's renewables industry a boost

China is poised to benefit from the Iran war as global energy disruptions accelerate a shift away from fossil fuels and toward clean technology and renewable power, industries that the Asian nation dominates, experts say.

- BY CHAN HO-HIM, ANIRUDDHA GHOSAL AND ANTON L. DELGADO

Most of the oil and gas from the now mostly shut Strait of Hormuz was Asia-bound. Asian nations are scrambling to save energy and bolster their dwindling reserves. Gasoline prices in the U.S. and Europe have been spiking.

Although most of Asia is hit hard, China will probably benefit from the fossil fuel disruptions despite being the biggest purchaser of Iranian oil. China leads the world in battery, solar and electric vehicle exports, and its industries are forecast to face a rise in demand for renewable products.

Before the Iran war began in late February, China’s lead in clean technologies was lengthening. The U.S. under President Trump scaled back on renewable energy and leaned on its vast oil and natural gas resources, promoting energy exports to achieve what Trump described as “energy dominance.”

Now Chinese industry giants including vehicle maker BYD and battery producer Contemporary Amperex Technology Co. Ltd., or CATL, are well-positioned to capitalize on growing interest in low-emissions energy products as the world confronts the fragility of fossil fuels.

“China’s approach to energy-sector development and geopolitics has been completely validated by the Iran conflict,” said Sam Reynolds with the U.S.-based Institute for Energy Economics and Financial Analysis.

Dueling visions

Over a decade ago, Chinese President Xi Jinping merged energy security with national security. China has since stepped up its focus on renewable energy, even though fossil fuels still dominate its energy mix at home.

China accounts for more than 70% of EV manufacturing and about 85% of battery cell production globally, according to the International Energy Agency. Its current five-year plan until 2030 continues to prioritize these industries.