Demand for Carbon Credits May Climb If Middle East War Drags On

A protracted war in the Middle East could lift demand for carbon credits in the compliance market, if ongoing disruptions to LNG supplies compel industries to turn to cheaper, higher-emission fuels.

Utilities and other major users may consider switching to coal if LNG remains backed up due to airstrikes and the effective blockage at the Strait of Hormuz, a key transit point, according to Camille Wee, a BloombergNEF analyst. She noted this also happened when the Russia-Ukraine war broke out in 2022 and upended energy markets.