Higher carbon pricing for net zero by 2050 could drive stagflation
Transition economic impact could echo 1970s oil shock - PIIE
Rise in carbon prices required by 2030 could serve as negative supply shock to global economy of similar magnitude to 1973-74 quadrupling of oil prices, thinktank says
The global energy transition required to avoid cataclysmic climate change will now need to be abrupt rather than gradual following decades of policy procrastination. This could potentially cause a period of slow economic growth combined with high price inflation, or "stagflation", akin to the one following the 1973-74 oil price shock, according to a paper by Washington-based thinktank Peterson Institute for International Economics (PIIE). “Reasonable optimism about the long-run effects of the transition to a carbon-neutral economy is no reason to overlook transition costs,” Jean Pisani-Ferry, an economist at PIIE says in the paper. “These costs, while bearable, are likely to be significant.”
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