Ron Wallace is a former Member of the National Energy Board.The closure, first by Iran and then subsequently by the United States (US), of the Strait of Hormuz has caused an international energy crisis with prices spiking above US$100–120/bbl and LNG prices jumping more than 50% from 2025 averages. While the current events in the Straight of Hormuz were not predictable at the time we wrote our paper in 2022, the consequences of emissions policies that advocated for the curtailment, and in some cases the elimination, of vital fossil fuels were nonetheless predictable. As we wrote then: “North America and particularly the European Union are experiencing the consequences of misguided energy policies that have undermined efforts to sustain energy security throughout the West.” Mintz and Wallace, 2022.As Western economies raced to reduce carbon emissions, many lost sight of the vital contribution that fossil fuels make to economic resilience and national, regional, and international security. Those policies, especially in the EU, have demonstrated that energy transitions are neither automatic nor inherently secure and have been seen to result in market instabilities, power interruptions, and continued price escalations.Evidence from Germany’s recent experience demonstrates that assumptions of a smooth, inevitable shift to renewables have seriously underestimated system complexity and have shifted the emphasis to reliability, affordability, and geopolitical resilience. The strategic role of firm energy supply was demonstrated when the EU was forced to spend an additional €6 billion in just 17 days on fossil fuel imports as renewables alone could not stabilize its grid. The EU’s energy bill rose by €24 billion in the first 52 days of the Iran conflict, showing how price escalations and supply insecurity persisted despite aggressive decarbonization policies..A 2026 analysis by the Canada Energy Regulator and CAPP highlights that geopolitical volatility has increased the importance of energy self-sufficiency, supply chain resiliency, and export diversification. While Canada remains relatively energy self-sufficient, central Canada remains heavily reliant on US transiting pipelines, US imported oil, and natural gas. .In 2022, we argued that energy security would consistently trump concerns for climate change because of the outsized economic and strategic importance of oil and gas. Although recent announcements indicate that policy changes may be at hand, since 2015, Canada has implemented regulatory and tax policies that have substantially blocked Canadian energy from reaching beyond traditional destinations to enter the international marketplace. The exception is the performance of the Trans Mountain pipeline, which in 2025 delivered an annual average of 761,000 barrels per day with an annual average utilization of 86% to return more than $1.7 billion to Canada through interest payments, dividends, and fees. While these results indicate the importance of encouraging enhanced Canadian access to international markets, they also present a sobering reminder of the income foregone by Canada because of major project cancellations, like the Northern Gateway pipeline, by the Trudeau government..Canada and Alberta have both maintained legislated or policy anchored net zero commitments, frameworks that are explicitly designed to constrain the emissions profile of hydrocarbon production, at a time when the major points in the Canada-Alberta MOU for a BC coast pipeline remain unresolved. Meanwhile, as European states reassess and evaluate the effects of energy security shocks, Canadian energy could be backfilling against sanctioned Russian oil and gas and curtailed shipments from the Middle East. Despite reassurances, Canada appears fixated on policies for net zero, with few realistic options to increase exports to the EU or to optimize energy security within Canada.Europe’s strategic policy decision to undermine its own energy production in favour of renewables has exacerbated the effects of the Iran crisis. Europe is now twice as exposed to the Hormuz crisis as is the US and faces an imminent shortage of strategic supplies such as jet fuel — a dual threat to the military and industrial capacity of Europe. Meanwhile, the US has become a major net exporter of refined products, including jet fuel, with shipments to Europe surging to record levels. Europe, by contrast, must import 60% of its total energy and 40%–75% of its jet fuel.The Iranian conflict demonstrates that policies for net zero and renewable energy, commitments that required vast financial investments, are wholly insufficient to maintain energy and economic security. As the fourth largest global producer of crude oil, Canada’s opportunities have been limited by insufficient infrastructure, punitive regulatory timelines, and limited international access. The Iran shock has exposed the false assumptions of uninterrupted global trade and steadily falling demand for fossil fuels.Ron Wallace is a former Member of the National Energy Board.
