As governments recognize the importance of climate action and push every corner of the economy to decarbonize, industries from glass to steel to autos are being left with little choice but to change how they make products and ultimately what they sell. The technical hurdles and investment involved mean it’s going to cost much more. Just two examples: Making glass without poisoning the planet costs 20 percent more, cleaner steel is up to 30 percent more expensive.
The potential price hit from the green revolution is adding to the arguments about the inflation outlook that are already brewing as economies reopen from pandemic lockdowns and some commodity prices surge to record levels. BlackRock Inc., the world’s largest asset manager, and the Bank of England put the issue in the spotlight this month, while others have also cited environmental demands as one reason why the current inflation pickup won’t be transitory.