Threats to household purchasing power

The energy transition poses several threats to household purchasing power: GDP sharing will have to be skewed in favour of investment and at the expense of consumption, since the energy transition requires a significant additional investment effort. This will come at the expense of household purchasing power, for example because taxes will have to be increased to finance more public investment, or because companies will want to reduce wages to offset the fact that the necessary investments have low financial returns; Energy prices will rise sharply, since the intermittent nature of renewable energy production means that electricity production capacity must be much higher than demand and the electricity produced must be stored, which is costly. If we want to avoid a loss of household purchasing power due to these different causes, we will have to accept a decline in the return on equity, in net capital income. This is because maintaining household purchasing power will require: Either public transfer payments to households financed by increased taxation of capital income; Or wage increases (for example by re-indexing wages to prices) that will directly reduce the return on equity.