Energy Security After Hormuz: Renewables Strategic Vulnerability

The recent crisis in Iran created an energy shock with worldwide consequences that everyone is already familiar with: rising costs, supply shortages, and the economic risks.

The lesson learned from this was obvious: reduce dependence on fossil fuels. Across Europe and Asia, governments started accelerating plans for electrification in response. 

The logic is clear - unlike oil tankers that need to travel great distances crossing vulnerable shipping lanes, solar panels cannot be blockaded by a navy. These systems are generally more distributed, flexible, and resilient to geopolitical disruptions.

Yet there is another lesson emerging from the same crisis. 

The Path of Renewables leads through China

The irony of the current moment is that the global push toward energy independence increasingly runs through China.

Chinese exports of renewable related technology reached record levels in the months following the outbreak of the conflict with exports of solar technology alone reaching 68 gigawatts in March 2026, which is 50 percent higher than the previous record. Fifty countries registered record imports of Chinese solar products during the same period.

This doesn’t come as a surprise since China today occupies a dominant position across the clean-energy supply chain.

According to estimates, China produces nearly 80 percent of the world's solar panels and controls even larger shares of key components such as wafers and cells. It also refines approximately 90 percent of rare earth elements used in wind turbines and electric vehicles. At the same time it holds an important position in battery manufacturing and critical mineral processing.

Hence, we come to a dilemma.

On one hand, renewable technologies offer a way to overcome vulnerabilities from fossil fuel supply chains, but on the other, the speed of that transition, or even the possibility of it actually happening depends on Chinese manufacturing, their processing facilities, and technology.

In Europe, officials have openly questioned this since the concern is very real.  China has already demonstrated its willingness to use export restrictions as a geopolitical tool. Back in 2025, Beijing imposed restrictions on several rare earth exports in response to the trade disputes at the time. This precedent raises concerns about supply chain resilience and strategic leverage.

A Different Kind of Dependency

There are important differences between dependence on fossil fuels and dependence on clean-energy technologies.

While the effects would differ from those of an oil embargo related to immediate day-to-day operability, renewable vulnerabilities would be felt on the long run slowing energy transitions, increasing costs, and creating significant economic disruption.

Therefore, the question is not if the energy transition should occur - it needs to - The question is whether governments can build these energy systems while avoiding excessive concentration within the supply chain.

Possible Disruption Scenarios

China’s dominant position represents a risk for the supply chain when utilized  as strategic leverage. Among the possibilities, tensions surrounding Taiwan stand out as one of the most plausible pathways through which supply-chain disruptions could emerge. 

Taiwan remains one of China's core strategic interests. Beijing has repeatedly stated that it opposes any steps it perceives as supporting Taiwanese independence making it a sensitive topic. 

In the event of a serious political or military crisis involving Taiwan, China could seek to impose costs on countries it believes are interfering in its affairs and it could choose to leverage the economic tools at its disposal. 

In such a case, Beijing would not need to impose a complete embargo or start a war to create disruption. More subtle measures could be used depending on what fits more according to the situation: export licensing requirements, administrative delays, restrictions on specific strategic materials, or prioritization of domestic industries.

These could be sufficient to increase costs and slow the deployment of renewable-energy projects abroad. 

This would not be unprecedented. China has previously used trade restrictions, import bans, and other forms of economic pressure in disputes with countries including Australia and Lithuania, and with more need of green technology this sector presents an attractive source of leverage.

Triggers 

A “Taiwan-related crisis" is not a single scenario situation, it could emerge in different ways Some are relatively unlikely but potentially catastrophic, while others are more plausible and could develop gradually over time. Understanding these triggers is essential for assessing both the likelihood and potential impact of disruptions to clean-energy supply chains. 

Scenario 1: A Formal Taiwanese Declaration of Independence

Likelihood: Very Low | Impact: Extreme

The most dangerous scenario, a formal declaration of independence by Taiwan remains highly unlikely.  Taiwanese governments have generally preferred maintaining the status quo, trying to keep a neutral tone, recent comments by President Lai Ching-te illustrate this. During a public appearance, he talked about Taiwan's distinct political identity. He framed the relationship between the People's Republic of China and the Republic of China as two entities that are not subordinate to one another—without calling for a formal declaration of independence. 

The United States also comes into play here. Despite its historical support for Taiwan's self-defense,it has also consistently discouraged such a declaration from happening  in order to preserve regional stability.

Nevertheless, should a Taiwanese government decide to formally abandon the current ambiguity surrounding the island's status, China would most definitely consider ita  crossing one of its clearest red lines. In such circumstances, Beijing could resort not only to military pressure but also to economic retaliation including renewable-energy supply chains against countries perceived as supporting Taiwan. 

Scenario 2: Accidental Escalation in the Taiwan Strait

Likelihood: Medium | Impact: High

A more realistic concern than a deliberate confrontation is the possibility of accidental escalation. Military activity around Taiwan has increased considerably in recent years, with Chinese aircraft and naval vessels operating more frequently near the island.

Moments of tension have already been created due to that. One example occurred in 2024 when a Chinese fishing boat capsized while attempting to evade Taiwanese coast guard authorities near the Kinmen archipelago, resulting in two fatalities. Although the incident was handled, it triggered a diplomatic dispute between Beijing and Taipei  public sentiment on both sides.

As military and maritime operations become more frequent and complex, the risk of miscalculation inevitably rises. 

Scenario 3: Expanded U.S.-Taiwan Security Cooperation

Likelihood: Medium | Impact: Medium-High

Another plausible trigger comes  from a gradual expansion of security ties between the United States and Taiwan. This scenario would not require a dramatic event or sudden policy shift. Instead, tensions could emerge through a series of incremental developments such as larger arms sales, the deployment of additional military advisers, expanded joint training programs, or higher-level diplomatic engagement.

Recent discussions surrounding a potential new U.S. arms package for Taiwan illustrate this dynamic. Taiwanese President Lai Ching-te has expressed interest in strengthening Taiwan's defense capabilities,continuing  to seek closer security cooperation with Washington. Although such measures are often presented as defensive in nature, Beijing would likely view them differently, as evidence that the United States is gradually eroding the "One China" framework. In response, China may seek to impose costs while remaining below the threshold of military escalation 

Indicators to keep an eye on

For the moment the main objective is to  identify indicators or developments  that could suggest risk levels are increasing and further which scenario seems more likely to lead to in order to know how to respond..

• Expansion of Chinese export controls on critical minerals.

• Increased military activity around Taiwan.

• New U.S.-Taiwan defense agreements or major arms sales.

• Chinese rhetoric linking economic measures to sovereignty issues.

• Strategic stockpiling of rare earth elements and critical minerals.

  
  

Ultimately, the challenge for governments in the coming decades will not simply be replacing fossil fuels. It will ensure that the next energy system is more resilient than the one it replaces.