One month into the US and Israel’s war on Iran, at least 60 countries have taken emergency measures in response to the subsequent global energy crisis, according to analysis by Carbon Brief.

So far, these countries have announced nearly 200 policies to save fuel, support consumers and boost domestic energy supplies.

Carbon Brief has drawn on tracking by the International Energy Agency (IEA) and other sources to assess the global policy response, just as a temporary ceasefire is declared.

Since the start of the war in late February, both sides have bombed vital energy infrastructure across the region as Iran has blocked the Strait of Hormuz – a key waterway through which around a fifth of global oil and liquified natural gas (LNG) trade passes.

This has made it impossible to export the usual volumes of fossil fuels from the region and, as a result, sent prices soaring.

Around 30 nations, from Norway to Zambia, have cut fuel taxes to help people struggling with rising costs, making this by far the most common domestic policy response to the crisis.

Some countries have stressed the need to boost domestic renewable-energy construction, while others – including Japan, Italy and South Korea – have opted to lean more on coal, at least in the short term.

The most wide-ranging responses have been in Asia, where countries that rely heavily on fossil fuels from the Middle East have implemented driving bans, fuel rationing and school closures in order to reduce demand.

‘Largest disruption’

On 28 February, the US and Israel launched a surprise attack on Iran, triggering conflict across the Middle East and sending shockwaves around the world.

There have been numerous assaults on energy infrastructure, including an Iranian attack on the world’s largest LNG facility in Qatar and an Israeli bombing of Iran’s gas sites.

Iran’s blockade of the Strait of Hormuz, a chokepoint in the Persian Gulf, is causing what the IEA has called the “largest supply disruption in the history of the global oil market”.

A fifth of the world’s oil and LNG is normally shipped through this region, with 90% of those supplies going to destinations in Asia. Without these supplies, fuel prices have surged.

Governments around the world have taken emergency actions in response to this new energy crisis, shielding their citizens from price spikes, conserving energy where possible and considering longer-term energy policies.

Even with a two-week ceasefire announced, the energy crisis is expected to continue, given the extensive damage to infrastructure and continuing uncertainties.

Asian crunch

Carbon Brief has used tracking by the IEA, news reports, government announcements and internal monitoring by the thinktank E3G to assess the range of national responses to the energy crisis roughly one month into the Iran war.

In total, Carbon Brief has identified 185 relevant policies, announcements and campaigns from 60 national governments.

As the map below shows, these measures are concentrated in east and south Asia. These regions are facing the most extreme disruption, largely due to their reliance on oil and gas supplies from the Middle East.

Nations including Indonesia, Japan, South Korea and India are already spending billions of dollars on fuel subsidies to protect people from rising costs.

At least 16 Asian countries are also taking drastic measures to reduce fuel consumption. For example, the Philippines has declared a “state of national emergency”, which includes limiting air conditioning in public buildings and subsidising public transport.

Other examples from the region include the government in Bangladesh asking the public and businesses to avoid unnecessary lighting, Pakistan reducing the speed limit on highways and Laos encouraging people to work from home.

Europe – which was hit hard by the 2022 energy crisis due to its reliance on Russian gas – is less immediately exposed to the current crisis than Asia. However, many nations are still heavily reliant on gas, including supplies from Qatar.

The continent is already feeling the effects of higher global energy prices as countries compete for more limited resources.

At least 18 European nations have introduced measures to help people with rising costs. Spain, which is relatively insulated from the crisis due to the high share of renewables in its electricity supply, nevertheless announced a €5bn aid package, with at least six measures to support consumers.

Many African countries, while also less reliant on direct fossil-fuel supplies via the Strait of Hormuz than Asia, are still facing the strain of higher import bills. Some, including Ethiopia, Kenya and Zambia, are also facing severe fuel shortages.

There have been fewer new policies across the Americas, which have been comparatively insulated from the energy crisis so far. One outlier is Chile, which is among the region’s biggest fuel importers and is, therefore, more exposed to global price increases.

Tax cuts

The most common types of policy response to the energy crisis so far have been efforts to protect people and businesses from the surge in fuel prices.

At least 28 nations, including Italy, Brazil and Australia, have introduced a total of 31 measures to cut taxes – and, therefore, prices – on fuel.

Even across Africa, where state revenues are already stretched, some nations – including Namibia and South Africa – are cutting fuel levies in a bid to stabilise prices.

Another 17 countries, including Mexico and Poland, have directly capped the price of fuel. Others, such as France and the UK, have opted for more targeted fuel subsidies, designed to support specific vulnerable groups and industries.

These measures are all shown in the dark blue “consumer support” bars in the chart below.

Such measures can directly help consumers, but some leaders, NGOs and financial experts have noted that there is also the risk of them driving inflation and reinforcing reliance on the existing fossil fuel-based system.

Christine Lagarde, president of the European Central Bank, spoke in favour of short-term measures to “smooth the shock”, but noted that “broad-based and open-ended measures may add excessively to demand”.

Measures to conserve energy, of the type that many developing countries in Asia have implemented extensively, have been described by the IEA as “more effective and fiscally sustainable than broad-based subsidies”.

So far, there have been at least 23 such measures introduced to limit the use of transport, particularly private cars.

These include Lithuania cutting train fares, two Australian states making public transport free and Myanmar and South Korea asking people to only drive their cars on certain days.

Clean vs coal

At least eight countries have announced plans to either increase their use of coal or review existing plans to transition away from coal, according to Carbon Brief’s analysis. These include Japan, South Korea, Bangladesh, the Philippines, Thailand, Pakistan, Germany and Italy.

These measures broadly involve delaying coal-plant closure, as in Italy, or allowing older sites to operate at higher rates, as in Japan – rather than building more coal plants.

There has been extensive coverage of how the energy crisis is “driving Asia back to coal”. However, as Bloomberg columnist David Fickling has noted, this shift is relatively small and likely to be offset by a move to cheap solar power in the longer term.

Indeed, some countries have begun to consider changes to the way they use energy going forward, amid a crisis driven by the spiralling costs of fossil-fuel imports.

Leaders in India, Barbados and the UK have explicitly stressed the importance of a structural shift to using clean power. Governments in France and the Philippines are among those linking new renewable-energy announcements with the unfolding crisis.

New renewable-energy capacity will take time to come online, albeit substantially less time than developing new fossil-fuel generation. In the meantime, some nations are also taking short-term measures to make their road transport less reliant on fossil fuels.

For example, the Chilean government has enabled taxi drivers to access preferential credit for purchasing electric vehicles (EVs). Cambodia has cut import taxes on EVs and Laos has lowered excise taxes on them.

Finally, there have been some signs that countries are reconsidering their future exposure to imported fossil fuels, given the current economics of oil and gas.

The New Zealand government has indicated that a plan to build a new LNG terminal by 2027 now faces uncertainty. Reuters reported that Vietnamese conglomerate Vingroup has told the government it wanted to abandon a plan to build a new LNG-fired power plant in Vietnam, in favour of renewables.

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The post Iran war analysis: How 60 nations have responded to the global energy crisis appeared first on Carbon Brief.

Iran war analysis: How 60 nations have responded to the global energy crisis

Seven Senate Democrats launched the probe over controversial tax credits to the country’s largest exporter of liquefied natural gas.

By Phil McKenna

Seven Democratic U.S. senators have launched a probe into a $370 million “alternative fuel” payout to Cheniere Energy, made earlier this year by the IRS, that critics say the liquefied natural gas export company never should have received.

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Every few days, Bazlur Rashid Shawon spends hours waiting in line with his motorcycle to buy petrol. Six litres used to last him two weeks, but with many fuel stations limiting sales to two litres per customer, he has to queue up more often.

“The long hours waiting under the sun drain my energy and take away precious time from my busy days,” the 32-year-old pharmaceutical company employee told Climate Home News as he waited in a traffic jam on the way to work in the capital, Dhaka.

Bangladesh relies heavily on imports to meet its fuel needs and it has been badly affected by disruption in global energy markets since the start of the Iran war. Striving to stem demand for petrol and diesel, the government has ordered reduced working hours at offices and malls, while many fuel stations have been shut due to shortages.

The crisis could, however, give momentum to Bangladesh’s nascent efforts to ramp up electric transportation in the country of 175 million people, following in the footsteps of South Asian EV leaders such as Nepal.

Among the government’s energy-saving measures, it said it would scrap duties on imported electric buses for schools.

New NDC maps rising EV ambitions

In its latest national climate plan, Bangladesh says it wants electric cars to account for 30% of the market by 2035. By the same year, a quarter of the buses circulating on the capital’s roads should be electric, according to the country’s updated nationally determined contribution (NDC).

While the country has a long way to go on EV adoption, there are signs that the global oil shock triggered by the Middle East conflict has stirred interest among consumers.

Nepal’s EV revolution pays off as oil crisis causes pain at the pumps

In the capital, Dhaka, dealers of electric cars, scooters and three-wheelers told Climate Home News they had seen a rise in sales and customer enquiries over the last month.

Mohammad Salauddin, who has been in the Dhaka e-bike business for 10 years, said demand was weak when he started: only one or two bikes a month from his showroom in the city’s Hazaribagh area. With the fuel crunch, sales have risen to about 20 bikes a month.

He has now expanded his business, setting up another showroom elsewhere in the city, and said demand is outpacing supply.

“The demand will only rise in the coming days as people see the benefits of electric transport,” he said.

South Asia’s EV laggard

But despite the optimism of EV retailers, Bangladesh’s electric transport ambitions face numerous challenges – from scant charging infrastructure and policy incentives to high purchase costs and hesitance among consumers.

Bangladesh is a laggard on EV adoption in South Asia. EVs account for less than 1% of new vehicle sales, much lower than in neighbouring India, where statistics put EV penetration at about 8%. In Nepal, electric vehicles now make up about three-quarters of new car sales.

Registered e-bikes are few and far between and electric cars remain a niche segment. Millions of electric three-wheelers operate on the roads, but most of them are unregistered.

Last year, the government slashed import duties on components for e-bikes manufacturing and drafted a national electric vehicle policy spelling out incentives for manufacturing and importing EVs. But the policy is still waiting to be approved.

Growth barriers

Even if government policies are fully implemented, EV adoption faces other hurdles in Bangladesh.

Fuwad Hossain Saddam, who works at Keraniganj on the outskirts of Dhaka, has an e-bike and says it is the best option for short trips, but not for longer journeys.

“For commuting to the office, taking children to parks, or going to the market for shopping – e-bike,” he said. “For long distances, petrol-powered transport is the way to go.”

“Petrol is unlimited, e-bike is limited,” he said, adding that his older model stretches to only about 50 kilometres (30 miles) on a full charge, with charging taking six to seven hours.

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Lack of charging infrastructure is one of the biggest barriers to EV adoption in Bangladesh, which has only 112 formal EV charging stations, though the count varies depending on how charging points are defined, said Nayeem Hossain, head of EV sales at Trade Intercontinental.

Most EVs in the country use lead-acid batteries, as opposed to faster-charging and longer-lasting lithium-ion batteries, he said, suggesting that battery-swapping facilities at fuel stations would be a quick way to encourage EV usage and adoption.

“This could enable people to rapidly increase the range and mileage of their EVs,” he said.

Offering a subsidised charging rate for EVs could also spur take-up and tackle use of unauthorised electricity connections – commonly used by the country’s legions of unregistered electric three-wheelers.

High initial purchase costs also make EVs a distant dream for many would-be buyers in Bangladesh, where the average monthly wage is 18,000 taka (about $146).

Raja Chowdhury, 35, a businessman, has used an electric scooter for seven years. He said he was happy with his purchase, but added that it was not something everyone can afford.

“If the budget allows, choose lithium; if not, start with acid batteries and save to upgrade later,” he said.

Until upfront costs come down and charging becomes easier, many riders like Shawon will delay making the switch to electric.

“For the time being, waiting in line for fuel seems to be the only option for me,” Shawon said.

The post Charging worries, high prices put brakes on EV growth in Bangladesh appeared first on Climate Home News.

Charging worries, high prices put brakes on EV growth in Bangladesh