The former chief of the Bank of England, Lord King, has claimed that the bank's commitment to achieving net zero emissions is exacerbating inflation. According to Lord King, incorporating climate change into policymaking is the proverbial "straw that breaks the camel's back." He argues that the Bank's focus on climate change is misplaced, stating that "arbitrary dates for outlawing gas boilers and petrol cars made no sense." Instead, he proposes implementing a carbon tax on total emissions as a solution.
Climate Change as a Quasi-Religious Debate
In an interview with the Daily Telegraph, Lord King emphasized that climate change is a complex issue without simple answers. He criticized the ongoing debate surrounding climate change as becoming a quasi-religious discussion rather than a sensible approach to achieving economic outcomes. Despite acknowledging the need to address climate change, he believes it should be approached with pragmatism rather than dogmatism.
Bank of England's Role in Climate Change
Current Bank of England governor, Andrew Bailey, has argued that addressing climate change is imperative and that there is no excuse for inaction. However, he has also stated that it is not the Bank's responsibility to assist in the overall adjustment of the world to a net zero economy.
Government's Mandate for the Bank
As Chancellor, Rishi Sunak updated the Bank's remit, instructing policymakers to facilitate the transition to a net zero economy. This aligns with the government's commitment to combat climate change and reduce emissions.
The Impact on Inflation
Lord King's criticism suggests that the Bank's focus on climate change may be contributing to rising inflation. He argues that policymakers should prioritize measures such as a carbon tax rather than implementing arbitrary timelines for phasing out certain technologies.
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