Green Dreams, Inflationary Realities
We must find ways to combat climate change without incurring devastating inflation, greater class division, the immiseration of the middle class, and the destitution of the poor.
Joel Kotkin and Hügo Krüger
27 Jul 2022
Global policy and politics, particularly in the high-income world, have been obsessed with dreams of a green economy. Imposing ever-more rigid methods to reduce greenhouse gas emissions as the way to “save the planet” is almost unchallenged in the media, academia, and corporate boardrooms of the developed world. The results on the ground have been less convincing, as the price of everything—from energy and food to construction costs—rises to unsustainable levels and international trade slows as global recession looms. Billions now face immiseration, malnutrition, or starvation. Economist Isabel Schnabel calls this process “greenflation”—companies’ efforts to reduce emissions have driven up prices, particularly since the Russian invasion of Ukraine.
This has caused tremendous price pressure on rare earths, copper, and other materials critical to the production of batteries. The green lobby and its media supporters, meanwhile, like to claim that renewable energy is now economically competitive. But in places where strict green energy policies have been introduced, people end up with skyrocketing energy costs. In California, residents pay up to 80 percent above the US national average for electricity. Reliance on wind power has made even Texas’s grid vulnerable. Rather than learn from these experiences, other states, notably New York, have decided to adopt similar policies.
The biggest losers from greenflation are predominately the largely powerless working class and the denizens of developing countries. But even energy rich and historically prosperous countries like Australia face severe price hikes and shortages, as do Canada and the US. Economies have been severely impacted, particularly the agriculture and manufacturing sectors. In the developing world, where environmentalists have been working to block fossil fuel plants for years, over 3.5 billion lack reliable access to electricity. Greenflation has incited a new wave of political instability, as seen most recently in the meltdown of Sri Lanka.
Looking backwards
https://quillette.com/2022/07/27/green-dreams-inflationary-realities/
