An Analysis Paper by the Carboun Institute’s
Diplomacy, Geopolitics and Cooperation Program

In the Shadow of the Iran War: How MENA Importers and China Can Accelerate the Energy Transition

Authors: Jemima Oakey, Lamia Boumazgour

The 2026 Iran war and the disruption of energy flows through the Strait of Hormuz has exposed the structural vulnerability of fossil fuel import dependence across the Middle East and North Africa (MENA). For net energy importers Egypt, Jordan, Morocco, and Tunisia, the conflict triggered immediate fuel price shocks, rising electricity costs, fiscal pressure, and heightened energy insecurity. The crisis has reinforced the risks associated with dependence on imported hydrocarbons and the exposure to geopolitical volatility in energy markets this entails.

As a result, renewable energy deployment is increasingly viewed not simply as a climate objective, but as a strategic necessity linked to national security, economic resilience, and long-term energy sovereignty. Egypt, Jordan, Morocco, and Tunisia possess some of the world’s strongest solar irradiance levels and substantially under-developed renewable potential. Accelerating deployment would reduce import dependency, provide plentiful and cheap renewable energy largely insulated from geopolitical supply chain disruption, generate employment opportunities, and reduce fiscal strain on sizeable fossil import bills.

The crisis also presents significant opportunities for Chinese renewable energy manufacturers. China dominates global renewable energy manufacturing, particularly in solar photovoltaics, battery energy storage systems, and Electric Vehicles. However, Chinese firms increasingly face industrial overcapacity, declining profitability, and intense domestic competition. MENA markets provide an opportunity to absorb excess production capacity while deepening China’s long-term economic engagement in the region.

This convergence creates a strong alignment of interests. MENA countries require affordable renewable technologies and infrastructure; Chinese manufacturers require external demand capable of supporting industrial production.

Pakistan’s model of supportive regulation and capitalizing on low renewable tech prices to scale up cheap and affordable renewable energy for consumers led to import of 50 GW in Chinese solar photovoltaics since 2022.

MENA states can replicate Pakistan’s model — supportive import and deployment regulation combined with capitalizing on low renewable tech prices to scale up cheap and affordable renewable energy for consumers, while Chinese manufacturers expand into markets with high irradiance and strong desire to develop energy security to assuage overcapacity challenges. Chinese renewable exports, engineering expertise, and infrastructure development capabilities could substantially reduce the cost of renewable deployment across the region.

Under a trilateral cooperation model, Chinese firms would provide low-cost renewable technologies, engineering expertise, and construction capacity, while, similar to the China energy consortium’s recently awarded contracts in Saudi Arabia, Gulf sovereign-wealth-fund-backed energy companies, such as Masdar and ACWA Power, would provide long-term investment capital. European and international institutions are well positioned to play a complementary financing role. China’s BRI could provide the broader institutional framework for scaling renewable financing throughout the region, while lower Chinese technology prices substantially improve project bankability by reducing upfront capital expenditure requirements for import-dependent MENA states.

Despite these opportunities, major obstacles remain. The most significant challenge is financing. Egypt, Jordan, Morocco, and Tunisia lack the fiscal capacity necessary to support large-scale renewable infrastructure. High debt burdens, currency instability, and competing social spending priorities constrain domestic investment. Consequently, renewable deployment will depend heavily on external financing from Gulf Cooperation Council (GCC) investors, Chinese institutions, multilateral development banks, and European concessional finance mechanisms.

Additional barriers include insufficient electricity grid readiness, lack of energy storage, bureaucratic delays, regulatory uncertainty, and geopolitical sensitivities surrounding Chinese infrastructure involvement. Unless financing, governance, and infrastructure bottlenecks are addressed, MENA countries will remain dependent on imported fossil fuels, leaving their energy security and economic stability vulnerable to future geopolitical shocks.