There’s a word you should know if you want to understand part of our sky-high inflation. It’s “greenflation,” which means the rush into renewable energy that’s pushing up prices on everything. Though greenflation is happening everywhere, because Illinois’ green energy climate policies are among the most aggressive in America, our state is a leading culprit.
Prices for the basic commodities that factor into most everything we buy have soared in the past five years. Copper prices, for example, which are widely seen as representative of commodity prices, are up over 60 percent in that time.
Why?
“New government-directed spending is driving up demand for materials needed to build a cleaner economy,” as a leading global financial strategist wrote in the Financial Times. “The unintended result is ‘greenflation’: rising prices for metals and minerals such as copper, aluminum and lithium…,” he added.
And it’s getting worse. Green technologies “are set to account for the lion’s share of the growth in demand for most metals and minerals in the foreseeable future,” said a member of the European Central Bank’s executive committee.
Here in Illinois, green energy supporters celebrated CEJA, the 2021 Climate and Equitable Jobs Act, for leading the nation. It’s forcing massive investments in solar and wind projects to replace conventional electricity production, requiring Illinois to achieve a 100 percent zero-emissions power sector by 2045. And Gov. J.B. Pritzker has made electric vehicle production the centerpiece for economic development.
Meanwhile, demand for electricity is set to soar. Renewables never should have been expected to replace all conventional energy sources, but the new, monstrous energy demands for AI — artificial intelligence in computers — now makes for an impending crisis.
Every AI chip uses about as much electricity each year as do three electric vehicles, according to the Manhattan Institute. Data centers with them consume enormous amounts of energy, and their numbers are exploding. The appetite for AI chips is explosive and essentially unlimited, says the institute.
U.S. electric utilities therefore predict a “tidal wave” of new demand, as Reuters reported. “Today’s forecasts see near-term growth in demand for electric power three times as great as in recent years.”
Some utilities are “stumped” as to how they are going to bring enough generation capacity online, according to former U.S. Energy Secretary Ernest Moniz.
More demand with inadequate supply inevitably means higher consumer prices for energy itself — and that’s in addition to greenflation’s effect on other prices.
Sure, that’s all bad, but we are saving the planet from global warming, right? That’s because we are living up to the famous Paris Agreement standards for reducing warning, which Pritzker committed to as soon as he was inaugurated. President Biden made the same, national commitment.
Wrong.
The global emissions reductions envisioned in Paris “are now a fantasy,” as a senior fellow at Stanford’s Hoover Institution, Steven Koonin, recently wrote.
“Emissions grew to an all-time high in 2023, with consumption of coal, oil and natural gas each near record levels,” Koonin wrote. Despite global renewable-energy investment of almost $12 trillion in the nine years ending in 2023, fossil fuels continue to provide about 80 percent of the world’s energy. The latest United Nations emissions report projects that emissions in 2030 will be almost twice as high as a level compatible with the Paris aspiration.
Inflation has many causes, but greenflation is a big one. And since there’s no letup in the obsession with global warming and renewable energy, count on prices going still higher.
