Decarbonization and “Greenflation” – Economic News, Analysis, and Discussion

Policy Center for the New South, PB-51/21

Accelerating the transition toward low or net-zero carbon emissions is necessary to keep global warming at theoretically safe levels. That will likely bring price shocks associated with rising metal prices, energy costs, and carbon taxes – what has been called “greenflation”. Greening the economy will also require public spending and redistributive policies.

Moving Faster Along the Road to Decarbonization

In the wake of the COP26 Climate Change Conference in Glasgow, the International Energy Agency has updated the CO2 emissions scenarios in its World Energy Outlook from October(IEA, 2021a), taking into account the most recent country pledges. Despite a steeper decline in emissions, the world would still be far from reaching the dreamed-of net zero emissions scenario by 2050 (Figure 1).

Source link