Chronic. We know the social problems that the energy transition will bring about. It is likely that income inequalities will increase with the rise in energy prices, because the weight of energy in consumption is very high for low-income households. Many jobs will be destroyed in the sectors producing or using fossil fuels – for example in the internal combustion engine industry; jobs will certainly be created in renewable energies, electric cars, thermal renovation of buildings. But these new jobs require different qualifications and are located in different locations than the jobs destroyed: hence a potential problem of adaptation and mobility of skills.
On the other hand, there are relatively few questions about the social problems that could arise from the massive need for investment and the monetary policy that the central banks will have to conduct in the face of this need. The energy transition will indeed require additional investment, which the International Renewable Energy Agency estimates at 4.2% of GDP worldwide for the next thirty years (in France, 100 billion euros per year for thirty years). The activities concerned are the production and storage of renewable energies, electricity networks, decarbonisation of transport and industry, carbon capture, thermal renovation of buildings and housing.
To invest more, you have to save more, and since, initially, this investment does not produce additional income, you have to consume less. However, deliberately lowering the consumption of low-income households is socially unacceptable. Moreover, in order to invest more, companies will have to increase their profit margins, and therefore increase their prices, which will reduce purchasing power. And the States, to invest more, will increase the tax burden, which will also reduce consumption…
Transition or inflation?
The action of the third player in investment, the central banks, also poses specific problems. The investments necessary for the energy transition have two characteristics: they have a very long-term horizon and they are often not very profitable – this is particularly the case for the thermal renovation of housing. For them to be realized, however, long-term interest rates must remain low, otherwise their cost of financing will be too high in relation to their profitability. If they want to promote the energy transition, central banks must continue their policy of keeping interest rates low…
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