What causes inflation? And how is it connected to the energy transition?
Standard business press narratives often discuss inflation as if it has a mind of its own, seldom exploring its root causes. However, the connection between inflation and fossil fuel prices is both undeniable and significant. In fact, as you’ll hear at the end of today’s interview, endless interventions by the Fed may be an unavoidable consequence of the energy transition, from now until the project is complete.
So why aren’t we having a conversation about how Putin’s invasion of Ukraine ultimately led to your having to pay more for everything, as inflation was transmitted through from fossil fuels to everything else? Why did Congress give us the Inflation Reduction Act in 2022, instead of the Fossil Fuel Reduction Act? And what is the role of the Fed in the energy transition?
In this conversation, climate economist Gernot Wagner of the Columbia Business School rejoins us to help us understand the relationships between fossil fuels and inflation. We discuss why the Fed acts as it does, and we explore the Inflation Reduction Act in the US and the REPowerEU policy package in the EU, and the complex interconnections between monetary policy, industrial policy, and energy policy.
Dr. Gernot Wagner is a climate economist at Columbia Business School. His research, teaching, and writing focus on climate risks and climate policy. Prior to joining Columbia as senior lecturer and serving as faculty director of the Climate Knowledge Initiative, Gernot taught at NYU, Harvard, and Columbia. He was the founding executive director of Harvard’s Solar Geoengineering Research Program. Prior to his time at Harvard, Gernot worked at the Environmental Defense Fund, the Boston Consulting Group, and the Financial Times. He has been a term member of the Council on Foreign Relations, a Senior Fellow at the Jain Family Institute, and is a CESifo Research Network Fellow, a Faculty Affiliate at the Columbia Center for Environmental Economics and Policy, a Member of the New York City Panel on Climate Change, a Coordinating Lead Author of the Austrian Panel on Climate Change, and he serves on the board of CarbonPlan.org.
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Recording date: March 5, 2024
Air date: April 3, 2024
Geek rating: 6