Inflation has emerged as the top issue for most Americans ahead of the midterm elections. Rising labor costs, energy prices, and interest rates are increasingly adding to inflationary woes.
And much to the Biden administration’s chagrin, the $1.9 trillion American Rescue Plan is the largest driver of inflation. Additionally, Democrats refuse to admit their push for Environmental, Social, and Governance (ESG), especially in energy policy, in both the public and private sectors is also a major problem. As more financial leaders scrutinize so-called sustainable investing, there’s ample evidence suggesting ESG exacerbated the 9.1% increase in the consumer price index.
Of the three ESG prongs, the “E” factor—which accounts for environmental stewardship and natural resources development in business practices—is primarily contributing to inflation.
Seema Shah, chief global strategist at Principal Global, calls this phenomenon “greenflation.” In fall 2021, Shah warned how the push to transition away from fossil fuels, notably in the form of advancing net-zero policies, “created a chain reaction resulting in higher energy prices and, ultimately, higher consumer costs.” She also explained how “en-flation” (environmental inflation) is adding to uncertainty by way of carbon credits, harsh penalties for companies that fail to meet U.N. climate targets, and increased investment in technology along with research and development (R&D), for instance.
American Petroleum Institute CEO Mike Sommers blamed the Biden administration’s “misguided” energy policies, namely their decarbonization push, for compounded inflationary pressures.
Ultimately, consumers will be burdened by “en-flation” as costs are naturally passed down to them. Columbia University’s Lucas Toh explains the transition to 100% wind and solar energy will be expensive, writing: “The reality is that wind and solar are only cheap during the early stages of transition.”
Currently, states with existing renewable portfolio standards paid $125.2 billion more in electricity costs compared to states without them. So much for fossil fuel divestments being lucrative…