Experts urge faster renewable transition as Hormuz crisis threatens energy security

Experts have urged the authorities concerned to accelerate their transition to renewable energy to meet demand amid the closure of the strategic Strait of Hormuz following the US-Israel strikes on Iran.

The evolving situation created by the war has exposed the risks of Bangladesh's heavy dependence on imported fossil fuels, they said at a discussion virtually "Asia at the Epicentre: How a Strait of Hormuz Shock Would Hit Asian Energy Security and Economies," yesterday.

The discussion was jointly organised by the Institute for Energy Economics and Financial Analysis (IEEFA) and Zero Carbon Analytics.

The experts warned that the Strait of Hormuz, a key Persian Gulf route for crude oil and LNG, could quickly disrupt global markets and impact import-dependent economies.

Sam Reynolds, LNG and gas research lead for Asia at IEEFA, said Asian economies that rely on imported fossil fuels are once again facing energy market volatility, four years after the Russian invasion of Ukraine.

Within days of the latest conflict, oil, LNG, and coal prices rose across Asia, with countries like Pakistan, India, and Bangladesh among the most vulnerable, the research lead said.

"The situation clearly shows the urgency of shifting toward domestic and clean energy sources," Reynolds said, adding that the cost of renewable technologies such as solar, onshore wind and battery storage has steadily declined over recent decades.

Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue, said the Hormuz crisis underscores the vulnerabilities of Bangladesh's energy sector, which is import-dependent and burdened by debt.

Urging financial institutions to expand investments in solar and other clean energy technologies, he said that if the crisis persists, it will increase import costs, subsidy burdens and broader economic pressure.

Besides, the situation could also create an opportunity for Bangladesh to prioritise renewable energy, he predicted.  

Mohammad Tamim, vice-chancellor of Independent University of Bangladesh, warned that a prolonged Strait of Hormuz disruption could heavily strain Bangladesh's gas supply system.

He noted that Bangladesh's main LNG suppliers are Qatar and Oman. If the crisis lasts next two weeks, losing about 900 million cubic feet of LNG daily could destabilise gas supply and severely disrupt industries and power plants.

Shafiqul Alam, lead analyst for Bangladesh energy at IEEFA, said the government might need to ration gas and electricity if the crisis continues. Spot LNG prices exceeded $15 per MMBtu on 2 March, and Bangladesh could cut spot-market purchases if prices climb further.

Brent crude prices have risen to about $82 per barrel. Since Bangladesh's long-term LNG contracts are tied to Brent, both oil and LNG import costs could rise, he said.

Zakir Hossain Khan, chief executive of Change Initiative, said much of Bangladesh's LNG imports, especially from Qatar, pass through the Strait of Hormuz. Any disruption or global price spike would raise import costs, power generation expenses, and industrial pressure.

International experts warned that the crisis underscores the strategic risks of heavy reliance on fossil fuels.

Li Shuo, director of the China Climate Hub at the Asia Society, said transitioning from fossil fuels is both good climate policy and crucial for national security.

Jan Rosenow, professor of energy and climate policy at the University of Oxford, said developing domestic clean energy is the best way to shield economies from global energy market volatility.