Q&A: How Will the US-Israel-Iran War Impact Climate Action?

Since the US and Israel's military campaign on Iran began in February, the global energy sector has been reeling.

Almost immediately, Iran closed the Strait of Hormuz, a narrow waterway off the country's south coast through which almost all of the Middle East's waterborne oil and gas is ordinarily shipped.

Now, exactly three months after the conflict's start, the strait remains far from fully operational. This has left the world with a huge deficit of fuel – around 20% of normal supplies. As a result, prices have spiked and shortages have been keenly felt.

In times of crisis such as these, the typical reaction of businesses is to go into self-preservation mode – consolidating and reducing spending.

In the context of the energy transition, however, this would be a missed opportunity.

With the global hydrocarbon market experiencing its second major crisis in four years, many critics believe now is the time to invest wholeheartedly in electrification, renewables and climate technology.

This is the position of Alicia Argüello, the Global Head of Sustainability at Hitachi Energy.

For her, this kind of approach will help to reduce dependence on fossil fuels, thereby circumventing all the instability and price volatility of the market.

In this Q&A with Energy Digital, Alicia tells us all about how businesses should be adapting to the crisis.

Please introduce yourself and tell us about your role at Hitachi Energy.

I’m Alicia Argüello, Global Head of Sustainability at Hitachi Energy. I joined in 2019 with a background in environmental engineering and a PhD in natural sciences, and today I lead our global sustainability function.

We have built the function from the ground up – from our first sustainability report to a CDP A score and strong progress on our Scope 1 and 2 targets. But metrics are not the end goal. 

The real work is embedding sustainability into how we run the business – across environmental, social and governance priorities – making it practical across the organisation and turning it into a real driver of business value.

How did you get into the energy sector?

Honestly, a bit by chance. I was looking for a new challenge, and at the time I did not fully appreciate just how central and fascinating the energy sector is. That changed very quickly. 

Once you are in it, you see how everything connects back to energy and how critical it is if we are serious about climate and sustainability. 

What keeps me here is the scale of the impact. We are not on the sidelines of the transition – we are right at the centre of making it happen.

What has Hitachi Energy's experience of the unfolding global energy crisis been thus far?

The energy crisis has reinforced the need to accelerate the shift to renewables. It has exposed the risks of overreliance on fossil fuels – price volatility, supply disruption and geopolitical instability. 

That only strengthens the case for renewables, which offer greater stability, stronger energy independence and long-term resilience. 

Renewables are not only a climate solution, they are also a security solution that can support local communities and economic development.

But this transition only works if investment in the grid keeps pace. The grid needs the same level of urgency.

Much of the world’s infrastructure is ageing and not ready for what comes next, yet it is essential to an electrified future. 

The crisis has made the need for grid modernisation impossible to ignore.

Electricity infrastructure is now a strategic asset, on a par with defence and telecommunications, especially as geopolitical tension, cyber risk and rising power demand put unprecedented pressure on energy systems.

Many analysts have suggested that the energy crisis will hamper the transition to clean energy. What is your view?

Very simply: I do not agree. If anything, the crisis has strengthened the case for moving faster on clean energy because it has exposed the weaknesses of fossil fuel dependence – from price volatility to supply disruption.

Renewables offer greater stability, stronger energy security and better long-term affordability. Solar is already the cheapest source of electricity in many markets.

So rather than slowing the transition, the current environment should push faster, more decisive action toward a more resilient and sustainable energy system.

Countries that are further along in the transition, with more renewables and stronger grids, have been better able to absorb these shocks. 

Spain, my home country, is one example: its higher share of renewables has helped cushion energy price volatility.

Renewables offer something fossil fuels cannot – more domestic, more price-stable energy with less exposure to geopolitical disruption. 

The trilemma is real, but renewables, backed by a modern grid, remain the only credible way to address it.

How – if at all – will the conflict in the Middle East affect long-term investments in the energy transition?

Short-term volatility is real, but the strategic direction has not changed.

If anything, recurring instability reinforces the case for energy independence built on renewables. Every shock to fossil fuel supply chains is a reminder of what is at stake.

The trilemma – security, affordability and sustainability – does not get easier when geopolitics turns unstable. It gets more urgent. Governments and investors need to hold their nerve and keep backing long-term infrastructure, not just short-term crisis response.

There are near-term pressures — higher financing costs and supply chain strain among them — but the long-term direction still favours clean energy. You can already see it in policy moves to accelerate solar, wind and grid infrastructure in markets around the world.

What should the public and private sectors be investing in to boost their energy security?

Grid modernisation. It is the one investment that addresses all three sides of the trilemma at once. The IEA estimates that US$600bn a year will be needed by 2040 in transformers, HVDC, digital grid management and cybersecurity.

That is not optional. It is the enabling infrastructure for everything else. But technology alone is not enough. Talent matters just as much. At Hitachi Energy, we are hiring more than 15,000 people by 2027 including from adjacent sectors like oil and gas.

Why is now an important time to retain sustainability as a core business value?

Now is exactly when sustainability has to prove its value. In tougher and more volatile markets, it can start to look discretionary. It is not. That is the principle of sustainability: it has to endure.

Sustainability is increasingly tied to competitiveness, resilience and long-term growth. You can see that in the market, where clean energy investment is now outpacing fossil fuels, and we see it in our own journey at Hitachi Energy.

We have moved from compliance and gap-filling to strategic value creation – strengthening tender competitiveness, reducing risk, driving innovation and opening new growth opportunities.

That is why sustainability is embedded in our strategy. It helps us build a stronger business and the secure, flexible power systems the transition depends on. Walking away from that now would not just be short-sighted. It would weaken the business.

How is Hitachi Energy adapting to the energy crisis?

By scaling up decisively and quickly. Adapting to the crisis means accelerating grid modernisation, renewable integration and resilient technologies that can move reliable clean power from where it is generated to where it is needed.

To support this renewables-led system, we are investing more than US$9bn across manufacturing, engineering, R&D and partnerships through 2027.

We are ramping up transformer production at a pace two to three times faster than others in the sector. We are also accelerating our digital capabilities, because managing complex energy systems requires smarter, more connected infrastructure.

And we are doing all of this while staying on track for our 2030 target of an 80% reduction in Scope 1 and 2 emissions. We have already achieved 75% since 2019. The energy crisis has not changed our direction. It has confirmed it.

How can you and the company help clients to adapt themselves?

By being a true partner in transformation, not just a supplier. We bring a century of power systems expertise across 140 countries – from core products such as transformers or switchgear to grid technologies like HVDC to digital automation and energy management software.

Right now, clients need more than equipment. They need partners who can help them navigate the strategic and operational changes ahead. That is exactly the role we want to play.