Since the energy transition that has begun is driving up the price of fossil fuels and there is still insufficient “clean” energy available, one could logically expect that the transition as a whole will further fuel inflation. “The demand for energy is increasing and will continue to increase,” Mujagic explains. ‘To discourage the use of fossil fuels, you will get extra taxes. So price can only go one way, and that’s high. But economists never all agree.
Common sense
An important caveat in this story, according to Mujagic, is that people can prepare when the government announces well in advance, well before the energy transition begins, what taxes will be raised and introduced and for how long they will be enforced. This effect has been demonstrated by a scientific study that the Swedish central bank has published on its website. ‘Then you see that the price-raising effect is implemented all at once, and not much happens after that. Then you really can make such a transition without inflation rising.’
Only: according to Mujagic, the results of that Swedish study are not, or hardly, applicable to the situation as we find it here. ‘We don’t have such a world. At EU level we do not yet know how we are going to do this, let alone if there is consensus on this globally. We can therefore conclude with common sense: demand continues to grow, supply continues to lag behind, and then, unfortunately, prices can only go up’.