Energy transition leading to higher inflation and lower growth

The other week, on Aug. 14, I attended the AmCham 8 Energy Forum held at Marriott Hotel Manila and energy transition dominated the discussion. Last week, on Aug. 21, I was one of session speakers in the Philippine Chamber of Commerce and Industry-Indonesian Chamber of Commerce and Industry (PCCI-KADIN) Business Forum, held at the PCCI HQ in Taguig City, I and my co-speaker, Iman Arif, talked about the beauty of coal energy.

- BIENVENIDO S. OPLAS, JR.

These terms — energy transition (from fossil fuels to intermittent renewables), net zero, and decarbonization — are for me economically irrational. The real energy transition we should work for is from unstable, blackout-friendly, and expensive energy to abundant, stable, cheap energy in order to achieve lower inflation and higher growth. Below are the numbers.

First, I added the total generation of wind plus solar (W+S) in 2014 and 2024, then computed the share of W+S over total generation, the (W+8)/T ratio. Then I got the average inflation rate and average GDP growth that touched those periods, 2009-2018 and 2019-2024.

The results are clear: countries with a (W+S)/T ratio of 20% and up have all seen rising inflation over those two periods, especially the Netherlands, Germany, the United Kingdom, Belgium, Poland, Sweden, Austria, Australia, and Chile. Even countries with medium (W+S)/T ratio of 9-16% also experienced rising inflation, like Canada and the USA.