Greenflation: A review of the Evidence linking the Green Energy Transition to Short-Run Inflation Pressures

Background: The rapid shift toward renewable energy and net-zero climate policies has raised concerns about greenflation—temporary upward pressure on consumer prices arising from the green energy transition itself. While the topic has attracted increasing attention from policymakers and central banks, a systematic synthesis of recent empirical evidence remains limited. Aim: This systematic review evaluates the existence, direction, and persistence of short-run inflationary effects associated with key elements of the green transition, including carbon pricing policies, energy-market adjustments, and large-scale green investment programmes. Methods: Following PRISMA-guided reporting principles, we searched Scopus, Web of Science, EconLit, RePEc/IDEAS, SSRN, Google Scholar, and major central-bank and international-organisation repositories for studies published between 2015 and 2025. Eligible studies provided empirical or model-based estimates of the impact of real-world green-transition policies or shocks on headline or core consumer price inflation within the first five years. After screening 1,322 records, eight recent high-quality empirical studies were included and assessed using a modified Newcastle–Ottawa framework. Findings were synthesised using structured narrative and comparative quantitative approaches. Results: Across different regions, methods, and policy settings, the included studies consistently report positive but temporary inflationary effects associated with the green energy transition in the short run. Carbon pricing mechanisms and energy-related transition shocks emerge as the most prominent contributors, while green investment-driven demand effects are generally smaller. The magnitude of reported effects varies across studies and contexts but is commonly described as modest and transitory, with inflationary pressures fading as energy systems adjust and supply constraints ease. Conclusion: The available empirical evidence suggests that greenflation exists but is limited in scale and duration. Short-run inflationary pressures linked to the green transition are unlikely to pose a major obstacle to price stability if appropriately managed. Well-designed climate policies, particularly those combining carbon pricing with revenue recycling and supply-side measures can further mitigate short-term price impacts while preserving long-term climate objectives.