Assis. Lecturer Niam A.Fawaz

Department of Agricultural Economics

In this dynamic world and in light of global changes and transformations ,from time to time, a new economic term appears resulting from imposed economic conditions and transformations, which makes it a reality that must be coexisted with and adapted to.

Green inflation means the rise in prices resulting from the applied policies that must be implemented in order to transition to the green economy, which aims to find alternatives energy that are less polluting and more environmentally friendly than the energy currently used.

The concept of green inflation is linked to the global transformations associated with climate change, which have greatly occupied the whole world in the recent era, especially after the completion of the concept of sustainable development in all its dimensions in the nineties of the last century, where the environmental dimension formed a basic pillar in it , it aims to reduce using environmentally polluting fossil fuels that are used in the production process and individual fuel consumption.

The required transformation process is not a simple process, on one hand, it is an expensive process that requires large investments in the energy field , and on the other hand, it is a long-term process , all of this puts great pressure on prices.

The rise in the costs of using polluted energy due to policies that attempt to reduce its use, such as carbon taxes, which are adopted by most industrialized countries, leads to an increase in the costs in the industries that use this energy, and this matter may generate two things: first one is a decrease in production in these industries, which leads to raise the prices, and the second one may the costs’ raise is passed on to the consumer, and this generates an upward trend in prices as well!.

The upward trend in prices is expected, and many studies confirm that until 2040 the world will witness noticeable inflation.

However, the percentage of increase in prices has not been specifically determined because it depends on the size of the less expensive alternatives that may be available in the short term.

As for the long term, many studies indicate that it is expected that this green transformation will have a negative impact on inflation, meaning that inflation will decline in the long term after industries adapt to the available alternatives, which will positively affect the supply side.

The world are rapidly moving toward green financing, which is provided to environmentally friendly projects that produce less polluting products, use low-polluting energy, or invest in alternative energy sources.

China is counted on, being one of the largest producers in the world and the most polluting of the environment, to bring about a noticeable change by using less polluting energy or using alternative technology .Studies on the Chinese economy confirm that the future results of the green transition in it will lead to a noticeable decrease in the inflation rate in the long term.

Global inflation has an unlimited range, meaning that its extent will reach all countries, and its greatest harm will fall on poor countries due to the weakness of the economic, social and environmental infrastructure.

  This green transformation process and preserving the environment is a participatory mission that requires the support of developed countries for developing countries, and this is what was confirmed and agreed upon by most global climate summits.

However, the economic policies adopted by many  countries’ governments, including Arab countries, such as the initiatives launched by central banks such as the Central Bank of Iraq in the field of renewable energy, are still very timid in bringing about the desired change, with a great weakness in awareness of the seriousness of this problem that threatens all the inhabitants of the planet.

This inflation is nothing but a merited tax to the environment because the world does not appreciated it.

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