Inflationary pressures from governments and businesses pursuing net-zero goals will go well beyond energy prices, according to policy experts, but they will be mitigated by easier access to funds and economies of scale.
The risks of "greenflation," or price and cost rises driven by global initiatives to convert to green energy, have been well documented.
They told the Reuters Global Markets Forum last week that rising costs, as well as supply chain issues for some of the commodities and items required for green projects, will not pose a long-term threat to clean energy's economic sustainability.
Overhead costs that will be reduced as a result of economies of scale include permit fees, installation labor costs, and client acquisition costs.
According to Harry Boyd Carpenter, managing director for green economy and climate change at the European Bank for Reconstruction and Development, overall prices for the business will trend downwards because there are minimal impediments to scaling up (EBRD).
Vaibhav Chaturvedi, a fellow at the Council on Energy, Environment, and Water (CEEW), sees "greenflation," or the costs of going green, as a concern, particularly in the short term.
"Underlying commodity prices are rising everywhere in the world," Chaturvedi said.
However, Chaturvedi regarded decreasing financing costs as a "big leverage" to offset the increase in underlying expenses.
In recent weeks, all eyes have been on inflation. The Labor Department announced earlier this month that the consumer price index, or CPI, jumped 6.2% year on year in October, the highest increase in 31 years. From automobiles and electricity to homes and consumer electronics, Americans are paying more money than they have in a long time.
Analysts say there is evidence that some of these price increases are the result of climate action: coal is more expensive because fewer U.S. miners are producing enough to meet demand, while steel is more expensive partly because some steelmakers, concerned about expanding production and their carbon footprints, have declined to restart idled blast furnaces.
Metals such as copper and nickel have just lately recovered from record-high bull runs fueled by insufficient supplies to meet the demands of a rising clean energy sector.
Furthermore, market pressures from decarbonization aren't the only thing driving up costs right now, as shipping bottlenecks continue to stymie global trade.
However, the word is being embraced by some to explain the twists and turns that may occur on the way to a greener future - as well as the expenses associated with reducing carbon emission sources.
According to Allied Market Research, the worldwide renewable energy market would more than double to approximately US$2 trillion by 2030, from over $881 billion in 2020.
Despite inflation and supply chain interruptions, Gauri Singh, deputy director-general of the International Renewable Energy Agency (IRENA), stated that lower finance costs contributed to a record generation of 260 gigawatts of energy from renewable sources in 2020.
"You will not actually get cheap money for anything that's a climate risk. Whereas for renewables, the market is softening," Singh said.