Economists are also very concerned about the energy transition. ‘The big question is whether the energy transition will fuel inflation, or whether it will actually cause prices to rise less rapidly,’ says economist Edin Mujagic.
Because the energy transition that has started is driving up the price of fossil fuels and there is still insufficient ‘clean’ energy available, you might logically expect that the transition as a whole will further fuel inflation. “The demand for energy is rising and will continue to rise,” explains Mujagic. ‘To discourage the use of fossil fuels, you will get extra taxes. Then the price can only go one way, and that is up. But economists never all agree.’
Common sense
According to Mujagic, an important side note to this story is that people can prepare when the government announces well in advance, well before the energy transition starts, which taxes will be raised and introduced and for how long they will apply. This effect was shown by a scientific study that the Swedish central bank has published on its own website. ‘Then you see that the price-increasing effect is implemented all at once, and after that not much happens. Then you can indeed carry out such a transition without inflation rising.’
Only: according to Mujagic, the results from that Swedish study are not, or hardly, applicable to the situation as we have it here. ‘We don’t have such a world. At the EU level we still don’t know how we are going to do this, let alone that there is consensus on this at the global level. We can therefore conclude with common sense: demand continues to rise, supply continues to lag behind, and then prices can unfortunately only go up.’
