The article was first published on OMFIF on May 8th, 2026.

Jordan Nann is Account and Content Executive at OMFIF.

The intersection of defence and energy sovereignty

In the face of geopolitical and military conflict, sustainability has taken a backseat as world leaders prioritise defence spending and ensuring access to oil. However, prioritising defence over combatting climate change might be a short-sighted perspective.

As climate change wreaks havoc on the globe, wars become more dangerous and more likely. The US and Israel’s war with Iran, and the Russia-Ukraine war before it, has demonstrated the precarity of relying on fossil fuels for energy supply. Sustainability has gone from being a nice-to-have to a matter of national security.

Iran and energy security

Iran’s disruption of the Strait of Hormuz has demonstrated the inherent volatility of dependence on oil: 20% of global oil flows are reliant on a single trade route. Further strikes on fuel facilities by the US and Israel have only reinforced these concerns. Oil and liquified natural gas prices have fluctuated wildly owing to the tense state of peace-talks between the US and Iran. The oil market is set to lose at least 1bn barrels of crude and refined products due to the war.

Moving away from a reliance on oil and specific trade routes is necessary for protecting national security. John Kerry, former US secretary of state, said it clearly: the lesson to learn is how not be dependent on other countries for energy.

Countries are turning to alternative fossil fuels to meet energy demand, and coal has benefitted most from the first months of this war. Especially in Asia, which has arguably felt the greatest shocks due to high dependency on unstable oil and natural gas supply, coal has been booming, with many countries lifting restrictions on mining and use.

However, as a response to national security challenges, further emphasis on industrial pollutants will only exacerbate the very problems that governments are trying to solve. Further, the relationship between national security and sustainability is self-reinforcing: military action contributes to global temperature rises, creating a more unstable and globally tense geopolitical environment, prone to more extreme military action.

The intersection of climate and defence

Beyond energy security, sustainability may be the key to strong defence. In 2024, the UK published a report highlighting just how important sustainability and climate resilience is to military capability and defence. It found that: ‘Failure to adopt changes in sustainable technology could leave our armed forces weaker, less agile, less resilient and less capable than our adversaries.’

Nato describes climate risk as a ‘threat multiplier’: physical changes to natural environments, like floods, droughts, temperature and geopolitical consequences of changing weather, increase economic and political instability in affected regions. For every one-degree Celsius rise in the global temperature, the world loses 12% in gross domestic product.

Further, climate shocks can lead to democratic decline and increased migration, which act as stress-multipliers in already unstable regions. Climate-exacerbated shortages increase societal instability, and rural degradation and declining economic decline make radicalisation more likely. Antonio Guterres, United Nations secretary-general, put it plainly: ‘Our addiction to fossil fuels is destabilising both the climate and energy security… Climate chaos is accelerating and delay is deadly.’

These challenges must be reckoned with by all industries, and defence especially. The longer-term climate changes and effects of increased environmental degradation must be considered in military planning. These include adequate risk assessment and sustainable infrastructure investment. An OMFIF roundtable on nature-related risk highlighted how these concerns translate not just to defence, but to the financial ecosystem broadly: through supply chain disruption, inflationary pressures, and insurance market stress and reduced insurability.

More to the story

The intersection between climate change and geopolitics goes beyond the supply of oil and gas for energy. The blockade of the Strait of Hormuz is impacting shipments of aluminium, green hydrogen infrastructure, nickel, cobalt, sulphur and graphite, which are all critical for sustainable infrastructure development, as well as for industrial, farming and medical functions. This is having an outsized impact on emerging markets in particular, where countries like India are still heavily reliant on fossil fuels for power, transport and cooking.

However, there could be some positive consequences of the oil volatility. For many countries, the most recent episode of conflict in the Middle East has laid bare the need to switch to renewable sources of energy. Countries like China and India are turning to green hydrogen, while China’s solar panel exports soared to a record high in March.

Trade disruption has also impacted the supply of petrochemicals for other critical resources, such as plastic production. Some manufacturers in countries that are heavily reliant on plastic for packaging, such as Japan and South Korea, are turning to eco-friendly paper products. While switching to paper over plastic might not be the long-term permanent solution to the worlds’ climate problems, a resurgence in research and development to find solutions and heightened interest in sustainability is refreshing.

As governments push for greater defence spending, the challenges posed by climate change to defence capacities matches the challenges posed to sustainable investors. The impact of climate change is far-reaching and devastating, feeding back into geopolitical instability and creating an ever-greater threat to national security.