(800) 669-5556


Greenflation: Myth vs Fact

Amid headlines about record inflation, critics of clean energy policy have tried to blame it for the higher heating bills and the general surge in prices–they even use the term “greenflation.” But climate-friendly policy is not the cause of the high prices. 

The world was already grappling with pandemic-related supply chain and labor shortages that contributed to rising sales prices. Now with the war in Ukraine, sanctions against Russia will likely help keep prices elevated on items connected to top exports – oil, wheat and metals.

In the case of natural gas prices, the pandemic disruptions and shortages along with an extreme cold snap last winter and other factors have all contributed to higher heating bills. “Climate policy is not to blame,” clarifies Fatih Birol, head of the International Energy Agency. 

Experts explain that, if anything, clean energy policies have a deflationary effect, such as subsidies for electric vehicles and decreasing economic dependence on oil. “The result is actually a decrease in [oil] demand; which leads to lower prices,” says Clark Williams-Derry of the Institute for Energy Economics and Financial Analysis. “A fossil-fuel-based economy is fundamentally driven by volatility.” 

Illinois consumers have experienced that first hand, as many have seen their natural gas prices double over the past year. The latest in a series of price spikes over the years began in February of 2021. This one was caused by record cold in the Southern United States–the kind of volatile weather that’s becoming more common as climate change gets worse–that disrupted the natural gas distribution system and limited supply across the country just as heating demand shot up. 

Other factors have helped keep prices painfully high including increased demand as economies worldwide begin to recover from the pandemic; increased Liquid Natural Gas (LNG) exports to other parts of the world, such as Europe, keeping supply lower here;  less gas exploration and well construction in recent years; increased use of gas for electricity generation last summer; and decreased gas production in the Gulf of Mexico where federal officials estimate more than 90 percent of gas production was knocked offline from Hurricane Ida last summer. 

The result has been devastating on our heating bills. The Energy Information Administration predicted the average US household would experience significant bill increases this year on average when compared to last year. The latest EIA statistics predict a 34.6 percent increase in Midwestern natural gas bills this winter (October through March). 

Other heating sources are also up: While Midwestern homes that heat with electricity are expected to pay about 3 percent more this winter, propane bills are predicted to be up about 46.5 percent and across the country heating oil bills are expected to surge by nearly 55 percent. 

Natural gas utilities have also played a role in the bill surge. While utility companies aren’t allowed to profit from gas supply rates, they can profit off another part of the bill, delivery rates. And they’ve been finding creative ways to increase that side of bills. For example, CUB has been fighting the Qualified Infrastructure Plant surcharge since it was introduced in 2013 as a way to rake in revenues more quickly than the traditional 11-month case before the Illinois Commerce Commission.  

Far from creating higher prices, policy that promotes clean, affordable energy has been trying to solve this problem. That’s why CUB is pushing for Illinois to begin planning now to move away from fossil fuel heat to find better ways to heat our homes. On a national level, a group of Senators is proposing President Biden invoke the Defense Production Act to ramp up production on clean energy technology (such as building electrification) to decrease our country’s dependence on imported oil. 

While climate change continues to worsen, the country is making progress. The American Clean Power Association states there’s now enough clean energy capacity here in the United States to power 56 million homes. That number is growing thanks to strong policies like the federal infrastructure bill and Illinois’ Climate & Equitable Jobs Act (CEJA) that are increasing energy efficiency, improving access to solar programs, and launching clean energy infrastructure improvements. Individual, eco-conscious actions also reduce energy loads and lower bills.  

“Clean energy policy hasn’t caused these price spikes, but it is the key to solving them,” said Cynthia Segura, CUB’s Carbon-Free Buildings Coordinator. “The switch to clean energy is a conscious, community-driven effort. We all have a role.” 

What can you do about these bill increases in the meantime? Here are a few of CUB’s tips from our Clean Energy page: 

  • Don’t overwork your heating system. Close blinds or cover your windows with blankets as an extra layer of protection against icy night winds. But let the sunlight through during the day to help heat your home. Clear radiators, registers, air returns and baseboards of obstructions. Dust, carpet and furniture can block the heat and leave a room chilly.
  • Reduce any drafts. Pinpoint drafts in your home. Your hardware store can provide the materials to seal those leaks.
  • Clean or replace filters. For a forced-air heating system, a dirty or non-functioning filter does nothing but drain money from your wallet. Check it every month—and clean or replace it if it’s dirty.
  • Set your thermostat to 68 degrees when you are home and awake. When you’re asleep or away, you can turn it 7-10 degrees lower. NEVER go below 55 degrees, because you could freeze your pipes.

Order our Guide to Going Green and visit our Action Center to find other ways you can get involved.