Former central bank deputy governor Guy Debelle dismissed fears of potential inflationary pressure from a green energy transition. A new study released by the Centre for Policy Development challenged the idea that inflation from a net zero push was “ill-founded.” The report highlighted the significant cost of transitioning Australia’s energy sector to meet future demands, noting the expense of replacing aging coal and gas power stations with renewable energy sources.
The report argued that the additional cost of the green transition was minimal when spread over several decades and would not add to inflation. It emphasized that the spending on renewable energy infrastructure would help households and businesses avoid blackouts and price hikes from volatile oil and gas markets. Researchers also stressed the importance of considering infrastructure spending to ensure reliable energy assets regardless of the transition’s timing.
Guy Debelle, a co-author of the report and former central bank deputy governor, reiterated that concerns about inflationary pressure from a green energy transition were unfounded. He pointed out that Australia had experience with large-scale infrastructure development and could use this knowledge to facilitate a smooth transition. Emphasizing the benefits of becoming a global leader in green technology and reducing emissions, Debelle highlighted the importance of committing to transition investments for a stable and affordable power supply.
Contrary to the Centre for Policy Development’s findings, research by Net Zero Australia suggested that achieving net zero emissions by 2060 could cost Australia up to $9 trillion. This immense investment would be required for the construction of wind and solar farms, transmission infrastructure, and energy storage. The pace of developing new large-scale renewable projects would need to double to meet the national renewable energy generation target by 2030. CEO Frank Calabria of Origin Energy cautioned about potential price increases and the impact on energy bills from the transition to renewable energy, stressing the need for honesty about the financial implications. He acknowledged the benefits of a future built on renewable energy but warned that significant investment could lead to upward pressure on energy bills, potentially causing backlash from the community.