Mark Carney, the former governor of the Bank of England, says going green will ultimately help to keep inflation low and stable
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 money spent on light and heat to be used elsewhere.
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 – in 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. Read more: https://www.telegraph.co.uk/…/central-bankers…/
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