Isabel Schnabel: A new age of energy inflation - climateflation, fossilflation and greenflation

Speech by Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, at a panel on "Monetary policy and climate change" at "The ECB and Its Watchers XXII" Conference, Frankfurt am Main, 17 March 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Accompanying slides of the speech.

Europe and the world are facing a watershed moment.

As the human tragedy in Ukraine unfolds before our eyes, surging commodity prices are pushing inflation in many countries to the highest levels in over 40 years, calling for a step change in energy policy.

Today, our dependence on fossil energy sources is not only considered a peril to our planet, it is also increasingly seen as a threat to national security and our values of liberty, freedom and democracy.

Accelerating the transition towards renewable energies is the task of the hour considering these threats. Every solar panel installed, every hydropower plant built and every wind turbine added to the grid are taking us a step closer to energy independence and a greener economy.

Renewable energies are "freedom energies", as German finance minister Christian Lindner recently put it. New technologies and facilities for renewable energies are an investment in our future.

Already today, the cost of electricity from renewable sources is significantly lower than that of conventional power plants. Further technological advances mean that, by 2040, even the costs of small photovoltaic systems can be expected to be lower than those of any fossil fuel power plant.