It was presented as a new utopia.
Clean abundant energy, available to all.
Millions of new jobs, flourishing economies, and a cleaner, greener world. And all while cutting bills and freeing up the money spent on light and heat to be used elsewhere. [emphasis, links added]
However, as the transition to net zero speeds up, and wind and solar power replace oil and gas, it is becoming increasingly clear that prices are not coming down fast.
Instead, experts fear that going green will make the inflation crisis worse – a fresh blow to the credibility of a string of central bankers who have predicted the opposite.
“The green transition will be expensive and, if tax collection does not keep up with increased spending, there will be an expansionary fiscal impact that could add to economic demand relative to supply, and thereby inflation,” says George Buckley, UK chief economist at Nomura.
While investment helps to drive innovation and increase productivity, which helps to lower price pressures, it also puts “an increasing strain on limited mineral supplies”, he adds.
The cost of this should not be underestimated.
Wind turbines, solar panels, electric vehicles, and batteries are all made with rare earth elements and critical metals.
All of this is likely to confound the central baking elite, who have called for a swift end to fossil fuels.
“The net zero transition is disinflationary,” Mark Carney insisted in a speech last year.
The former governor of the Bank of England doubled down on this assertion last month, admitting that while prices would probably rise for about a decade in pursuit of net zero, going green will ultimately help to keep inflation low and stable.
“Clean energy is cheaper. It’s cheaper today, and it will be cheaper still tomorrow, and it will be less volatile than the system that we have,” he told The Telegraph in an interview.
Christine Lagarde, president of the European Central Bank, agrees. “Extreme weather events can damage infrastructure, ravage harvests, and disrupt supply chains,” she said in a speech last year.
“This can push up prices for key products and thereby fuel inflation, making it tougher for us to keep prices stable. By contrast, reinforced efforts to shift our energy supply towards more economical renewables should ultimately help to slow inflation.”
However, Nomura has suggested that pressing ahead will make the Bank of England’s 2pc inflation target “increasingly difficult to achieve” – in part because of net zero.
UK inflation already stands at 8.7pc and is not expected to return to the Bank’s 2pc target until 2025. Faster action on climate “comes with a cost”, Nomura analysts say.
Nomura says piling levies on consumer bills, promoting the use of greener forms of energy and increased investment will all push up prices for decades to come.
Azad Zangana, senior European economist at Schroders, said that the challenge will get worse as an increasing number of nations go green. Going too fast risks another supply shock for the global economy and one that could substantially push up prices.
Read rest at Telegraph
As a Canadian, I consider Mark Carney a huge disappointment, a traitor, even.
We need to ask why the political class of the entire western world is so enthusiastic for something so obviously damaging as net zero.
Build Back Better is t he most empty and meaningless campaign Slogan Since Hope & Change we didn.t get either