A macroeconomics policy fit for the energy transition

The author contends that high fossil-fuel prices are essential market drivers for energy efficiency and the shift to renewables. To prevent social instability and energy poverty, the document proposes that EU governments avoid capping fuel prices and instead provide direct, inflation-linked compensation for heating, cooling, and food costs. Long-term recommendations include removing fossil-fuel subsidies, implementing a common EU carbon tax, expanding mass public transport, and shifting toward mission-oriented budgeting and ecological tax reform.

• High and stable fossil-fuel prices are necessary drivers for decarbonisation in a market economy, as they stimulate energy efficiency in manufacturing and transport and increase demand for renewable energy.
• To protect households without undermining climate goals, governments should provide targeted compensation for heating, cooling, and food costs rather than intervening to lower fossil-fuel prices.
• The author proposes a specific compensation model where the state covers 80 per cent of the rise in heating and cooling costs based on an average dwelling area, leaving a portion unpaid to encourage energy efficiency investments.
• The EU should eliminate fossil-fuel subsidies—which totaled 56 billion euros in 2019—and implement a common carbon tax with predictable yearly increases to provide a strong stimulus for technological adjustment.
• A transition to mass public transport is required to replace the EU's 249 million cars, as replacing them all with electric vehicles would be an inefficient use of raw materials like cobalt, lithium, and rare earth elements.
• The document suggests that nationalising fossil-fuel businesses within the EU could be a practical response to corporate climate lobbying and a way to bring production costs and revenues under government control.
• The author advocates for a shift from debt-to-GDP budget constraints to mission-oriented budgeting, potentially utilizing Modern Monetary Theory to fund the large-scale socioeconomic transformation required by the climate crisis.

APA

Matutinović, I. (2022). A macroeconomics policy fit for the energy transition. Green European Journal. https://www.greeneuropeanjournal.eu/a-macroeconomics-policy-fit-for-the-energy-transition/

Chicago

Matutinović, Igor. A macroeconomics policy fit for the energy transition. Green European Journal, 2022. https://www.greeneuropeanjournal.eu/a-macroeconomics-policy-fit-for-the-energy-transition/.

Wikipedia

{{cite press release |last1=Matutinović |first1=Igor |title=A macroeconomics policy fit for the energy transition |publisher=Green European Journal |date=3 August 2022 |url=https://www.greeneuropeanjournal.eu/a-macroeconomics-policy-fit-for-the-energy-transition/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{matutinovi2022macroeconomics, author = {Matutinović, Igor}, title = {{A macroeconomics policy fit for the energy transition}}, publisher = {Green European Journal}, year = {2022}, month = aug, url = {https://www.greeneuropeanjournal.eu/a-macroeconomics-policy-fit-for-the-energy-transition/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }