Telegraph: “How central bankers got it spectacularly wrong on net zero inflation”

Essay by Eric Worrall

h/t Peta of Newark; “The net zero transition is disinflationary”: Central bankers are clinging to the fantasy that renewable energy investment will cause a dramatic fall in energy prices.

How central bankers got it spectacularly wrong on net zero inflation

Experts fear the elite’s obsession with going green will cause prolonged pain for millions

By Szu Ping Chan10 July 2023 • 6:00am

It was presented as a new utopia. Clean abundant energy, available to all. Millions of new jobs, flourishing economies and a cleaner, greener world. And all while cutting bills and freeing up money spent on light and heat to be used elsewhere.

However, as the transition to net zero speeds up, and wind and solar power replace oil and gas, it is becoming increasingly clear that prices are not coming down fast. Instead experts fear that going green will make the inflation crisis worse – in a fresh blow to the credibility of a string of central bankers who have predicted the opposite.

“The green transition will be expensive and, if tax collection does not keep up with increased spending, there will be an expansionary fiscal impact that could add to economic demand relative to supply, and thereby inflation,” says George Buckley, UK chief economist at Nomura.

All of this is likely to confound the central baking elite, who have called for a swift end to fossil fuels.

“The net zero transition is disinflationary,” Mark Carney insisted in a speech last year. The former governor of the Bank of England doubled down on this assertion last month, admitting that while prices would probably rise for about a decade in pursuit of net zero, going green will ultimately help to keep inflation low and stable.

In the long run, net zero may indeed bring down prices. But before then, the politicians – and central bankers – face the challenge of explaining to the public that their utopian rhetoric on green energy is falling short of reality. 

Read more:

How could otherwise smart people get the inflationary impact of renewable energy so wrong, when it is obvious to anyone with basic scientific training that renewables are not fit for purpose?

There is only one explanation which makes sense. They don’t personally understand the science, and they are getting bad advice.

The only question is, how long will central bankers persist with this folly until they realise the emperor has no clothes? How long until they wake up to the reality that renewables will never have a deflationary impact, that pushing forward will lead to inevitable economic ruin?

And once bankers realise the green energy revolution has failed, how long one of them summons the courage to speak out, to admit their tenure as a central banker has all been a ghastly mistake?

We can only hope that at least one central banker is brave enough to remember their first duty is to the public. It will only take one central banker to tell the truth, to shatter the green mirage, to awaken everyone in the financial world to the reality that renewables are a dead end. Because if no central banker has the courage to step forward and say “enough”, we are all in for a hell of a ride.

Update (EW): Added the last paragraph of the Telegraph article, which claims one day renewables might bring down prices.

5 20 votes
Article Rating
Newest Most Voted
Inline Feedbacks
View all comments
More Soylent Green!
July 10, 2023 2:09 pm

The central bankers are so blindered they have yet to see their own policies are in large part responsible for the current round of inflation. They cling to outmoded, disproven Keynesian economic policies. The real world doesn’t match their textbooks and in typical fashion, they believe the real world is at fault, not their theories.

So no, I am not surprised they mistakenly believe green energy is disinflationary.

July 10, 2023 2:17 pm

The people that controlled the bankers knew.

Curious George
Reply to  Eric Worrall
July 10, 2023 2:40 pm

Of course true believers want to get in Paradise – but not today 🙂

Reply to  Eric Worrall
July 10, 2023 3:20 pm

Yes, communists believe in communism too, but one still has to wonder about those pulling the strings.

Reply to  Scissor
July 10, 2023 11:34 pm

Only the original communists around Lenins time believed in actual communism, and that was the real reasons the system collapsed , they long past believing in communism. What replaced it and is the belief system now is the Leninist-party-state system , which is practiced in China . Competing with that and in mostly Asia is the capitalist-party-state system with elections but mostly the same party

Rich Davis
Reply to  Eric Worrall
July 11, 2023 2:24 am

Have you really not considered that they owe their lucrative and prestigious positions to powerful people telling them what the party line is?

To keep any job you must satisfy the boss’s expectations. If the boss wants something absurd and you can’t talk them out of it in private then you’re hoping you can distance yourself from the inevitable blame for the inevitable failure. But if the boss doesn’t let you remain silent and demands that you actively support the policy, then you put together the most optimistic case for the doomed policy and continue to draw your bloated salary and enjoy your position of social prominence.

Tom Halla
July 10, 2023 2:20 pm

I would contend it is the ESG rating agencies, rather than a consensus of the bankers. And those agencies cater to the Green Blob, as well as several other generally leftist causes.
As long as their political overlords follow ESG as a worthy cause, or a way of catering to their constituents, knowing the mole on the Emperor’s butt looks like it might be melanoma will go unremarked on by the bankers.

Tom Halla
Reply to  Eric Worrall
July 10, 2023 2:32 pm

I think it is catering to politicians, despite what they might know.

Rich Davis
Reply to  Eric Worrall
July 11, 2023 2:30 am

Surely every single one knows. It wouldn’t take more than a few minutes on Google to uncover the unsolved problems with wind and solar.

Reply to  Rich Davis
July 11, 2023 4:41 am

I suspect that few politicians have made much effort to undertake personal research. More likely they are content to just parrot the party line.

Rich Davis
Reply to  DavsS
July 11, 2023 8:09 am

Note that the discussion was not about politicians, it was about central bankers commenting on what they claim to be their expertise (arguably price stability is their entire job). Now of course nobody who runs a central bank gets to that position without being to a large extent a politician. But the point is that generalist politicians get involved with just about everything. These guys are supposed to be experts on inflation and how to control it.

J Boles
July 10, 2023 2:26 pm

They will dig their heels in and say it is something else, anything else, causing it, not green energy.

J Boles
Reply to  J Boles
July 10, 2023 2:30 pm

OT but story tip – Groundbreaking research transmits energy from space to Earth (from CALTECH)
CBS video on you tube

Rich Davis
Reply to  J Boles
July 11, 2023 2:49 am

Now all they have to do to make it cost-effective is to manufacture solar panels in space from materials sourced on asteroids? How about building them on the moon using a commercial fusion reactor for power?

All that capital expense to overcome intermittency? As it is, a solar panel’s lifetime output as a multiple of the energy input to manufacture, deploy, and maintain is nothing to crow about. If the deployment cost (launch cost) becomes the main cost, is it possible to break even?

Tom Abbott
Reply to  Rich Davis
July 11, 2023 6:21 am

Here’s something interesting:

For the first time in decades, Congress seems interested in space-based solar power

Eric Berger – Jun 14, 2023 10:23 pm UTC

“As far as legislative moments go, the passage of a minor amendment to an innocuous US House resolution on Wednesday was not exactly groundbreaking. But for space exploration enthusiasts, the amendment offered by US Rep. Kevin Mullin, D-Calif., was kind of a big deal.

That’s because, for the first time since the 1970s, the idea of space-based solar power has been addressed legislatively by the US Congress.

“Although the technology to gather solar energy in space and send it to the surface as electricity is not yet commercially viable at scale, we already know from early research that it is possible,” Mullin said during a meeting of the Science, Space, and Technology Committee on Wednesday.

Mullin was seeking to amend House Resolution 2988, a bill instructing NASA and the US Department of Energy to collaborate on key areas of research and development, including propulsion, artificial intelligence, astrophysics, Earth science, and quantum computing. He sought to add space-based solar power to the list. The amendment passed overwhelmingly by a bipartisan committee vote.”

end excerpt

The Chicoms are intending to put a working demonstration solar power satellite in orbit by 2030.

We have another space race! 🙂

Rich Davis
Reply to  J Boles
July 11, 2023 8:28 am

And how much of the power generated can possibly be collected on the ground and converted back to electricity? There has to be significant loss going through the atmosphere and portions of the beam not hitting a receiver dish. (Unless they would plan to use power levels that fry birds and airplanes straying into the beam).

It doesn’t add up. No wonder the government is interested in it.

Reply to  J Boles
July 11, 2023 4:48 am

“anything else, causing it, not green energy.” As they have in Texas with Winter Storm Uri. Therw they claim it was the failure of thermal backups that caused the grid blackouts. They ignore the data that shows that ERCOT started the blackouts before the thermal failures and as renewables had dropped for hours and forecasts were for continuing drops.

Moreover they ignore the same ERCOT data that shows replacing thermals with renewables would take ~35-38 times the 2021 investment to meet weather caused grid stressors.

Tom Abbott
Reply to  corev
July 11, 2023 6:29 am

“Winter Storm Uri”

That would be the arctic cold snap of February 2021.

How did these storm naming geniuses get to “Uri”?

Were there 18 or 19 previous arctic cold snaps (going by the alphabetic naming of the storm) that came into the United States earlier in the year?

July 10, 2023 2:41 pm

Millions of new jobs

How can any anyone not understand that means massive payroll expansion? How can adding labour costs ever make energy cheaper?

Labour-intensiveness is a howling bug, not a feature.

Phillip Bratby
Reply to  quelgeek
July 10, 2023 11:24 pm

Absolutely. Productivity in the electricity supply industry has fallen dramatically

Dave Andrews
Reply to  quelgeek
July 11, 2023 9:43 am

Re millions of new jobs, the politicians and lobbyists etc for years have been talking about the massive amounts of ‘green jobs’ that the push for net zero will supposedly bring.

Few noticed that Wind Europe wrote to the EC as long ago as Feb 2022 saying that the industry in Germany alone “has lost over 50,000 wind jobs in the last six years’

Wind Europe letter to Ursula von der Leyen 22 Feb 2022

B Zipperer
Reply to  Dave Andrews
July 11, 2023 7:24 pm

New green jobs: Cleaning the dust, or snow, off the solar panels.
I suppose that is one of the only jobs our current educational system qualifies
its graduates for.

More Soylent Green!
July 10, 2023 2:46 pm

When economic theory and reality don’t match, it must be reality’s fault.

Reply to  More Soylent Green!
July 10, 2023 11:55 pm

That’s certainly the case with Climate science, where reality is what the believers in AGW want it to be. They have conned nearly everybody to their way of thinking and adding moral guilt clauses to shame everyone not onboard with their progressive thought bubbles. Bankers were told some of the truth several years ago by one of their own and look what happened to him. They like politicians haven’t a clue about scientific issues, especially controversial ones so they just believe what the elites tell them. Where is the due diligence in this process?

Rich Davis
Reply to  bobclose
July 11, 2023 3:00 am

Is that the Kamalama-dingdong theory? They’re all incompetent? Most of them are old white guys. How can they get away with being incompetent? I can see having a few incompetent diversity hires like Kamala, but that doesn’t apply to most central bankers.

Rud Istvan
July 10, 2023 3:00 pm

Central bankers should stick to banking.

Two obvious points elude them.

  1. The climate alarm is only based on obviously flawed models, since none of the past model predictions for stuff that was supposed to already have happened, happened. Fantasized alarm about a non-problem.
  2. The renewables solution to this non-problem can NEVER be anything other than inflationary. If renewables were deflationary, they would not need subsidies. And, renewables are intermittent when the grid isn’t. So they need backup. Which means for any meaningful penetration buying a backup generating system that is by definition underutilized. Simpler to skip the uneconomic renewables and just buy the backup system and fully utilize it for primary generation.
Frank from NoVA
Reply to  Rud Istvan
July 10, 2023 4:03 pm

‘Central bankers should stick to banking.’

Actually, central banks exist solely to support fractional reserve banking systems based on fiat currencies. Such systems predominate today because they enable the State in every instance to expand its role in society far beyond what would be possible within a free market / banking system. Central banking needs to be eliminated if we ever want to live under limited government again,

PS – The entire rubric of climate alarmism, renewables and every other form of government overreach would disappear absent the support of central banking.

Reply to  Frank from NoVA
July 10, 2023 11:38 pm

Good luck with that. Most of your claims are even worse than the tenets of communism.
JP Morgan was the central bank before there was a central bank, and recessions were unimaginable severe

July 10, 2023 3:03 pm

They don’t personally understand the science, and they are getting bad advice.

None of the modelling behind the Finkel inquiry into intermittent sources of power was based on intermittency. It was all based on averages. There is a big difference between average output of 25% and guaranteed output of zero.

This is the same with CO2 induced climate change. The useful idiots involved with climate models have no clue how the atmosphere operates. If they did, they would not be trying to parameterise clouds. No model will work unless it incorporates high spatial resolution, particularly vertically, that can develop convective potential. At minimum, they should have a hard clamp of 30C on ocean surface temperature.

July 10, 2023 3:11 pm

“There is only one explanation which makes sense. They don’t personally understand the science, and they are getting bad advice.”

No. Not at all. There is a perfectly good explanation that makes sense: The bankers are and have been salivating over the amount of money that they can make from government subsidies for renewables and from ‘extras’ like carbon credits, and they will tell whatever lies it takes to maintain their income.

(Central bankers, bankers. Essentially the same people.)

July 10, 2023 3:46 pm

What was that sage observation about someone “not understanding a consequence when his salary is dependent on him NOT understanding”?

July 10, 2023 3:51 pm

Everything you need to know about central banks was said on the editorial page in the New York Times, 18. January, 1920: “The Federal Reserve is a fount of credit, not of capital.

This qoute state, that, the centralbanks will never add anything to our capital structure, or to the formation og capital, because it is organized to produce credit, to create money for credit money and speculations, instead of providing capital funds for the improvement of commerce and industry. Simply stated, capitalization would mean the providing of notes backed by a precious metal or other commodity.

Should we hope that one of the mayor centralbanks will tell this, I think we are at 1 more than close to 0, 100%, that this is not going to happen. The “fairy tale” that net-zero is disinflationary is just as trusthworthy as the IPCC resumé to politicians.

July 10, 2023 3:51 pm

The problem is that central bankers are political appointees and therefore follow the political ideology, not sound economics. They know and care nothing about reality. Reality gets in the way of a “good theory”.

Joseph Zorzin
July 10, 2023 4:37 pm

“How could otherwise smart people get the inflationary impact of renewable energy so wrong, when it is obvious to anyone with basic scientific arithmetic training that renewables are not fit for purpose?”

Fixed it. 🙂

Reply to  Joseph Zorzin
July 10, 2023 5:20 pm

Agreed. I have long asserted that a high school student, using a spreadsheet, basic arithmetic, the Internet and the right questions could debunk ruinables as a weekend homework assignment. No science need be involved.

Pat from Kerbob
Reply to  pflashgordon
July 10, 2023 7:34 pm

There is nothing scientific about renewables, it’s pure engineering and rational thought debunking religious dogma.

No matter how much things change they are still the same

Edward Katz
July 10, 2023 6:00 pm

It’s ironic that so many well-trained and experienced types like these central bankers should have been so easily conned by the proponents of the green transition. Or could it be that they thought they saw an opportunity to make a quick buck for themselves by hyping a pig in a poke before general investors realized a scam was afoot.

July 10, 2023 6:13 pm

Bah. No banker is dumb enough to think that increasing prices reduces inflation.
Add in the obvious fact that green energy doesn’t just increase prices but the real cost of a fundamental component of the economy (by making energy both less efficient and less reliable) and “mistake” is not a possibility.

The ones at the bottom are corrupt, and lying to keep their jobs.
The ones at the top are evil, and lying to destroy the economy.

July 10, 2023 6:20 pm

My keyboard seems to have developed a issue..

Whenever I try to put a “B” on a certain word, it comes up as a “W”.

Pat from Kerbob
Reply to  bnice2000
July 10, 2023 7:28 pm

Maybe clean your glasses?

John Hultquist
Reply to  bnice2000
July 10, 2023 9:02 pm

Really? Mine substitutes a “C”.

Reply to  John Hultquist
July 10, 2023 10:09 pm


Mark BLR
Reply to  bnice2000
July 11, 2023 2:13 am

The collective noun for (central) bankers is “a wunch”.

So, for example, the last time I was on a business trip there was a Goldman Sachs conference at the hotel I was staying in.

It was the biggest wunch of bankers I’ve ever seen.

Pat from Kerbob
July 10, 2023 7:32 pm

Anyone who is in banking or economics that still say renewables reduce costs is an idiot or a fraud/liar, there are no other choices.

Carney is and always has been a fraud/liar.

Renewables cause the reduction in living standards, just ask the head of the Bank of England

Gary Pearse
July 10, 2023 9:02 pm

“when it is obvious to anyone with basic scientific training that renewables are not fit for purpose?”

So consensus climate scientists lack basic scientific training. I think this beyond dispute. Steve McIntyre hit the nail on the head when he said that climate scientists on the “Team” would be high school science teachers in earlier generations if they were lucky. I can’t locate the link. It’s been deeply layered over by the internerl irradicators

Thomas Finegan
July 10, 2023 9:07 pm

I’m no economist but I think soul crushing poverty from abandoning fossil fuels would be dis inflationary. If nobody has any money prices should come down.

Rich Davis
Reply to  Thomas Finegan
July 11, 2023 3:19 am

We haven’t had money even in principle since 1971. If we had money (asset-based preferably gold), then you’d be right. But there’s no scarcity of paper and ink and therefore no stability to the value of fiat currencies like the dollar.

July 10, 2023 9:59 pm

Experts fear the elite’s obsession with going green will cause prolonged pain for millions

Good to see “experts” are finally catching up with the rest of us.

TIP: For all you “experts” out there – subscribe to WUWT to expand your knowledge and expertise.

July 11, 2023 1:36 am

Central banker’s ‘first duty is to the public’??? Ha ha ha: their first duty is, of course, to their own career: always was, always will be – change will only follow when they are threatened with the boot.

old cocky
Reply to  Ian_e
July 11, 2023 3:48 am

The chairman of the Reserve Bank of Australia was just sacked (well, position not renewed) precisely for doing his job as laid out in the charter.

July 11, 2023 1:42 am

As John Maynard Keynes, the economist, once famously observed, in the long run we are all dead.

Ben Vorlich
July 11, 2023 1:43 am

Do they actually need a science degree or technical background?

Surely all they need is to get out of their centrally heated/climate controlled office and observe the weather for a few months. The two pieces of information information they need

  • is that Solar PV only works when the sun is at a resonable altitude, an hour after sunrise and an hour before sunset
  • wind turbines do nothing at windspeeds less than 7mph and only get near maximum at 25mph

Anything else about enough power to boil a billion kettles is bullshit of the highest order.

I have a dream that someone develops an App/Malware that switches politicians, bankers, JSO activists and BBC Reporters phones off unless Wind + Solar supplies more than 50% of UK electricity. It would be very quiet at the Beeb today

Rich Davis
July 11, 2023 2:07 am

There is only one explanation which makes sense. They don’t personally understand the science, and they are getting bad advice.

No, Eric. That explanation does not make sense, but there is another. They have a personal stake in the wasteful spending.

Nobody responsible for interest rate policy to manage inflation could possibly fail to consider “black swan” scenarios associated with multi-trillion dollar spending or fail to discover that there are plausible contrarian views to any putative ‘bad advice’ they are getting. A few minutes with Google or ChatGPT would do.

I have never encountered religious zeal in a finance officer. The idea that they are acting on blind faith in Climastrology is another explanation that we can certainly discard.

No, when an intelligent person says something that illogical, there is only one explanation which makes sense. They are consciously trying to deceive because they are acting on their personal incentives.

I don’t pretend to know what their incentive is, or whether they each have the same or different incentives, but to imagine that they are just stupid and naive is, well, stupid and naive.

July 11, 2023 3:44 am

Biden was in London: “Mr Sullivan said the President has ‘huge respect’ for the King’s commitment on the climate issue in particular. He said Charles has been a ‘clarion voice’ on climate and ‘someone who’s mobilised action and effort.”

It’s not just Central Bankers.

Tom Abbott
July 11, 2023 5:57 am

From the article: “Experts fear the elite’s obsession with going green will cause prolonged pain for millions”

I don’t think there is any doubt about it. Any unbiased observer can see the insurmountable problems looming on the horizon.

Wishful thinking is hitting the Reality Wall.

July 11, 2023 6:04 am

Carney was totally useless from start to finish. Why Boy George Osborne opted for a foreigner to run our bank heaven knows, unless the World Empire of Fascism cancer was already spreading and he was ordered to appoint him. He made a complete hash of post-2008 interest rates by publishing guidance on rate rise triggers and then moving the goalposts every time so ridiculously low rates persisted for too long.

July 11, 2023 7:13 am

You want to create more jobs give up the excavators and trucks for picks and shovels and you want even more jobs change them for forks and spoons. Eco-jobs101.

William Howard
July 11, 2023 9:27 am

all leftists are completely devoid of common sense – they live in an alternative/make believe universe

%d bloggers like this:
Verified by MonsterInsights