Emissions x Inflation

Emissions x Inflation

The world is becoming aware of the urgent need to reduce emissions. But, there is a huge challenge associated with two central issues.

1. Raise the required trillions of dollars

So that energy production is made possible through the use of clean sources. New plants must be designed and implemented both centralized and distributed

2. Dealing with Intermittency

Dispatch plants using sources such as wind and sun involves the entire production chain that still needs to be resolved.

An underlying and no less important aspect is the perception among energy sector leaders around the world that, given the magnitude of the financial resources needed, inflation is a real problem for two reasons:

1. Countries (governments) will need to "step in"

Providing the financial resources since it is estimated that the vast majority of private investors present in the countries will not be able to contribute with the required volume within the agreed upon deadline.

2. Countries have no budget!

The most likely way out for most countries is to get into debt as there is no planned allocation of this size.

In this scenario, inflation is the natural outcome predicted by energy/financial market analysts.

And so the question that is asked recurrently is: how each country will deal with this "dilemma".

Will it go ahead with a plan to reduce emissions by accepting a major inflationary cost, or will it decide to acquiesce to more emissions in exchange for more moderate inflation?