Read a summary of this article on FAST.
FAST
SINGAPORE: The prolonged disruption to the Strait of Hormuz has sent shockwaves across fuel markets, electricity prices, shipping routes and industrial supply chains.
The crisis highlights an uncomfortable reality: The world remains deeply dependent on fossil fuels beyond electricity and transport.
Recent climate talks in Santa Marta, Colombia, reinforced this reality. Organised to bypass the gridlock of United Nations COP summits, more than 50 governments attended the conference seeking to accelerate their transition away from fossil fuels. Discussions also covered energy security and economic resilience.
However, the absence of both the United States and China underscored the limitation of global negotiations without major powers fully engaged.
Show More Show Less
Oil and gas are not only fuels. They also serve as feedstocks for plastics, petrochemicals, fertilisers, pharmaceuticals, synthetic textiles and industrial chemicals that underpin global supply chains.
Disruptions in fossil fuel supply therefore affect not only transport and power systems. The ripple effects extend into consumer goods and manufacturing supply chains. Japanese snack manufacturer Calbee recently announced black-and-white packaging for several snack products due to shortages of petroleum-derived materials used in printing inks.
This reveals why phasing out fossil fuels is a far more complex task for governments than simply adopting green policies, say on electric vehicles or solar panels. While low-carbon alternatives such as biofuels and hydrogen are emerging, they face challenges related to cost, infrastructure readiness and scalability.
Aviation illustrates this challenge clearly. The aviation sector remains heavily dependent on conventional fossil-based jet fuel, and the Iran conflict has triggered warnings of potential jet fuel shortages and flight cancellations during the European summer travel season.
Sustainable aviation fuel (SAF), which is produced from renewable sources, offers a solution. However, it is constrained by limited production capacity and high costs. More importantly, most commercial aircraft today are certified to operate with only up to a 50 per cent SAF blend.
However, as geopolitical instability disrupts oil and gas markets, dependence on fossil fuels increasingly carries economic risks. Volatile fuel prices, shipping disruptions and broader supply chain uncertainties are effectively creating what could be described as a “fossil premium”.
In Singapore, some hawkers raised food prices due to rising ingredient, delivery and energy costs linked to the conflict, while local vegetable farms also warned of increasing operation costs from higher fuel and fertiliser prices.
The fossil premium has led to changes in consumer behaviour. Car dealerships from Australia to Europe have reportedly seen stronger interest in electric vehicles amid concerns over fuel price volatility.
In Singapore, several solar photovoltaic suppliers and service providers have reported increased enquiries for rooftop solar installations as households seek greater control over future electricity costs.
The current conflict may accelerate investments in renewable energy, electrification, biofuels and distributed energy systems, not necessarily because countries have become more climate-conscious, but because energy resilience and long-term cost stability are becoming increasingly valuable.
This reflects a broader shift in how clean energy is now being perceived. Renewable energy and electrification are no longer viewed solely as climate solutions. Increasingly, they are also seen as hedging mechanisms against geopolitical instability and fossil volatility.
In Southeast Asia, Indonesia and Malaysia have announced plans to accelerate renewable energy deployment and strengthen biofuel blending mandates, allowing for more plant-based fuel to be mixed into conventional fuels.
As the Hormuz crisis drags on, many countries are likely to pursue dual-track strategies of expanding low-carbon technology while maintaining sufficient fossil fuel production to support energy security and industrial stability.
Ultimately, global energy transitions are shaped not only by climate ambitions, but also by affordability, industrial competitiveness and national security concerns. This balancing act is particularly difficult for developing countries.
Energy demand across Southeast Asia continues to rise due to industrialisation, urbanisation and cooling demand. Several countries, such as Vietnam and Indonesia, still rely heavily on fossil fuels to maintain affordable electricity prices.
Singapore also faces this broader regional challenge. Energy security will remain a priority because of the country’s limited potential to generate renewable energy domestically.
Rather than prompting Singapore to rethink liquefied natural gas (LNG) imports entirely, the conflict may instead reinforce the importance of supply diversification and procurement flexibility. LNG allows Singapore to source supplies from multiple producers and regions, helping strengthen resilience against geopolitical and supply chain disruptions.
The current “fossil premium” created by geopolitical instability may eventually ease once markets stabilise. But by then, many countries and industries may already have accelerated investments into cleaner alternatives.
The Strait of Hormuz crisis may therefore not mark the end of fossil fuels, but it could become a catalyst that accelerates the parallel systems needed for a more resilient and diversified energy future.
Alvin Ee is a Research Fellow at the Energy Studies Institute, National University of Singapore
Source: CNA/zw(el)
Newsletter
Subscribe to CNA’s Morning Brief
An automated curation of our top stories to start your day.
Stay updated with notifications for breaking news and our best stories
Download here
Get WhatsApp alerts
Join our channel for the top reads for the day on your preferred chat app
Join here
Continue reading...
FAST
SINGAPORE: The prolonged disruption to the Strait of Hormuz has sent shockwaves across fuel markets, electricity prices, shipping routes and industrial supply chains.
The crisis highlights an uncomfortable reality: The world remains deeply dependent on fossil fuels beyond electricity and transport.
Recent climate talks in Santa Marta, Colombia, reinforced this reality. Organised to bypass the gridlock of United Nations COP summits, more than 50 governments attended the conference seeking to accelerate their transition away from fossil fuels. Discussions also covered energy security and economic resilience.
However, the absence of both the United States and China underscored the limitation of global negotiations without major powers fully engaged.
COMPLEX TASK OF PHASING OUT FOSSIL FUELS
CNA GamesShow More Show Less
Oil and gas are not only fuels. They also serve as feedstocks for plastics, petrochemicals, fertilisers, pharmaceuticals, synthetic textiles and industrial chemicals that underpin global supply chains.
Disruptions in fossil fuel supply therefore affect not only transport and power systems. The ripple effects extend into consumer goods and manufacturing supply chains. Japanese snack manufacturer Calbee recently announced black-and-white packaging for several snack products due to shortages of petroleum-derived materials used in printing inks.
This reveals why phasing out fossil fuels is a far more complex task for governments than simply adopting green policies, say on electric vehicles or solar panels. While low-carbon alternatives such as biofuels and hydrogen are emerging, they face challenges related to cost, infrastructure readiness and scalability.
Aviation illustrates this challenge clearly. The aviation sector remains heavily dependent on conventional fossil-based jet fuel, and the Iran conflict has triggered warnings of potential jet fuel shortages and flight cancellations during the European summer travel season.
Sustainable aviation fuel (SAF), which is produced from renewable sources, offers a solution. However, it is constrained by limited production capacity and high costs. More importantly, most commercial aircraft today are certified to operate with only up to a 50 per cent SAF blend.
Related:
THE “FOSSIL PREMIUM”
However, as geopolitical instability disrupts oil and gas markets, dependence on fossil fuels increasingly carries economic risks. Volatile fuel prices, shipping disruptions and broader supply chain uncertainties are effectively creating what could be described as a “fossil premium”.
In Singapore, some hawkers raised food prices due to rising ingredient, delivery and energy costs linked to the conflict, while local vegetable farms also warned of increasing operation costs from higher fuel and fertiliser prices.
The fossil premium has led to changes in consumer behaviour. Car dealerships from Australia to Europe have reportedly seen stronger interest in electric vehicles amid concerns over fuel price volatility.
In Singapore, several solar photovoltaic suppliers and service providers have reported increased enquiries for rooftop solar installations as households seek greater control over future electricity costs.
The current conflict may accelerate investments in renewable energy, electrification, biofuels and distributed energy systems, not necessarily because countries have become more climate-conscious, but because energy resilience and long-term cost stability are becoming increasingly valuable.
Related:
This reflects a broader shift in how clean energy is now being perceived. Renewable energy and electrification are no longer viewed solely as climate solutions. Increasingly, they are also seen as hedging mechanisms against geopolitical instability and fossil volatility.
In Southeast Asia, Indonesia and Malaysia have announced plans to accelerate renewable energy deployment and strengthen biofuel blending mandates, allowing for more plant-based fuel to be mixed into conventional fuels.
As the Hormuz crisis drags on, many countries are likely to pursue dual-track strategies of expanding low-carbon technology while maintaining sufficient fossil fuel production to support energy security and industrial stability.
A DIFFICULT BALANCING ACT
Ultimately, global energy transitions are shaped not only by climate ambitions, but also by affordability, industrial competitiveness and national security concerns. This balancing act is particularly difficult for developing countries.
Energy demand across Southeast Asia continues to rise due to industrialisation, urbanisation and cooling demand. Several countries, such as Vietnam and Indonesia, still rely heavily on fossil fuels to maintain affordable electricity prices.
Singapore also faces this broader regional challenge. Energy security will remain a priority because of the country’s limited potential to generate renewable energy domestically.
Rather than prompting Singapore to rethink liquefied natural gas (LNG) imports entirely, the conflict may instead reinforce the importance of supply diversification and procurement flexibility. LNG allows Singapore to source supplies from multiple producers and regions, helping strengthen resilience against geopolitical and supply chain disruptions.
The current “fossil premium” created by geopolitical instability may eventually ease once markets stabilise. But by then, many countries and industries may already have accelerated investments into cleaner alternatives.
The Strait of Hormuz crisis may therefore not mark the end of fossil fuels, but it could become a catalyst that accelerates the parallel systems needed for a more resilient and diversified energy future.
Alvin Ee is a Research Fellow at the Energy Studies Institute, National University of Singapore
Source: CNA/zw(el)
Newsletter
Morning Brief
Subscribe to CNA’s Morning Brief
An automated curation of our top stories to start your day.
Get the CNA app
Stay updated with notifications for breaking news and our best stories
Download here
Get WhatsApp alerts
Join our channel for the top reads for the day on your preferred chat app
Join here
Continue reading...