(Bloomberg) -- Bank of England Governor Andrew Bailey said the world's effort to shift away from using fossil fuels could spark inflation if it's done in a disorderly way, highlighting the risks involved with greening the economy.
That shift, which he said climate science suggests is needed to protect the Earth's atmosphere from bigger harms in the decades ahead, will be an opportunity for some industries and change the way goods like steel, cement and electricity are used.
His remarks were aimed at spurring early action by investors and corporate executives to clean up the emissions blamed for causing global warming.
“A disorderly transition, where more severe policies are introduced later in the horizon to compensate, could result in both lower growth and higher inflation from rising energy and materials costs in the economy,” Bailey said in a speech at an event hosted by Reuters on Tuesday.
He also said:
- The BOE will adjust its corporate bond purchasing scheme in the fourth quarter to shift the composition of the BOE's holdings toward greener securities
- The aim is to “incentivize companies to take actions contributing to an orderly transition to a net–zero economy”
- Bailey hopes for progress this year at the United Nations climate talks on green bond taxonomy, delivering common standards on securities meant to help cut harmful emissions
- Bailey will speak on Thursday about what work the BOE has done on climate and where its efforts will lead next
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