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Green jobs 2

By Dave Elliott

It is claimed that a transition to green energy would create a lot of employment. As I noted in my previous post, there are methodological difficulties facing those trying to make realistic estimates, but economists do produce estimates of employment creation for various investments and the net job impacts. For example an EU-wide study “EmployRES – The impact of renewable energy policy on economic growth and employment in the European Union” was conducted on behalf of the European Commission’s Directorate-General Energy and Transport in 2009. It claimed that policies that support renewable energy sources (RES) could give a significant boost to the economy and the number of jobs in the EU. Improving current policies so that the target of 20% RES in final energy consumption in 2020 could be achieved would provide a net effect of about 410,000 additional jobs over and above those lost from abandoning other energy activities. http://ec.europa.eu/energy/renewables/studies/doc/renewables/2009_employ_res_report.pdf

It is the added value from the use of renewables that mainly drives these gains. In part that is due to the fact that less fossil fuel would be used, reducing direct economic and indirect social, environmental and health costs. There are of course gainsayers to this view: www.thegwpf.org/top-economist-warns-green-jobs-creation-will-undermine-recovery

However, this type of wider economic analysis has continued to gain attention in recent years, given that fossil fuel prices have risen and, apart from short-term market blips/shale gas effects, look likely to continue to rise long-term. In addition nuclear costs have also risen. For example, in Germany there has been much attention paid to what is sometimes called the “merit-order effect”, i.e. the tendency, given the Feed-In Tariff system, for the output from renewables like wind to displace output from fossil sources, thus reducing costs to consumers. It is claimed that the overall savings are greater than the FiT subsidy they pay for wind. The basic argument is that if an investment portfolio approach is adopted, renewables like wind, with zero fuel costs, may win out: http://www.awerbuch.com/shimonpages/shimondocs/iea-portfolio.pdf

A more recent comparative study by financial group Ernst and Young (E&Y) seems to confirm this. By factoring in returns to GDP, like jobs and local taxes, E&Y’s analysis challenged the power sector’s standard “levelised cost of energy” (LCOE) approach. E&Y claimed that the net cost of European wind power was up to 50% lower than that of its main conventional power rival, combined cycle gas-fired plants.

The firm noted that in Spain producing 1 MWh will generate €56 of gross added value from wind, as opposed to €16 from CCGT. Across the six EU focus countries (Spain, UK, France, Germany, Portugal and Poland), wind’s net cost was competitive and, extrapolated across the EU as whole, actually cheaper: see link from http://www.eurotrib.com/story/2012/11/1/65817/6658

Following a similar net cost approach, a major renewables company, Mainstream Renewables, has pushed for recognition of the wider strategic benefits of offshore wind, for example in terms of security of supply and employment creation. The company noted that a 2012 UK study of the “Value of Offshore Wind” found that, by 2015, investment in offshore wind could increase UK GDP by 0.2%. It would also create over 45,000 full-time jobs. By 2020, it could increase GDP by 0.4% and the number of people employed to over 97,000; and by 2030, add 0.6% to GDP growth, create 173,000 jobs and deliver an increase in net exports of £18.8 billion, covering nearly 75% of the UK’s current balance of trade deficit: http://www.mainstreamrp.com/content/reports/capturing-the-value-of-offshore-wind.pdf

As we have seen, it seems credible that investment in renewables will create a net gain in employment in the EU, with the number depending on the scale of the programme. No doubt this pattern would apply to other areas. Certainly there is a boom in renewables around the world and that is creating many jobs. A 2008 UNEP “Green Jobs” review gave the following data for renewable energy jobs: China 943,000 (2007), USA 446,000 (2006) Germany 259,000 (2006), Spain 89,000 (2007) and globally 2.3 million. http://www.unep.org/publications/search/pub_details_s.asp?ID=4002

UNEP suggested that the total could be over 8 million by 2020 and that may well prove to be a major underestimate. For example, a 2012 review by the International Renewable Energy Agency estimated that gross global renewable energy employment increased from 1.3 million to more than 3.5 million jobs worldwide between 2004 and 2010, with the biofuels sector accounting for about half (1.5 million in 2010). It notes that one study suggested gross employment effects of up to 20 million jobs globally by 2030, with the highest job creation in the biofuel sector (up to 12 million) followed by solar (6.3 million) and wind (2.1 million).

Not everyone will welcome the expansion of biofuels work, depending on the conditions and eco/land-use implications, with at the very least tight regulation being needed. However, although the issue of biomass imports remains, within the EU the emphasis is more on wind and solar, with the EU passing the 1 million jobs mark in 2012. Interestingly, in IRENA’s 2014 review of renewable jobs globally, PV at 2.27 million, led by China, had overtaken biofuels at 1.45 million; the grand total for all renewables now rising to 6.5 million globally – http://www.irena.org/REjobs

The definition of green jobs can of course be widened beyond just green energy-related jobs. For example, Federal Environment Agency data show that there were 1.93 million people working in the environment protection sector in Germany in 2008, and the building trade is increasingly involved with environmentally-sound construction and energy-efficient housing. But even just staying with jobs in renewable energy supply, this is clearly a growth area, opening up many issues concerning, for example, regulation and training needs, with Germany leading the way: http://www.eu-employment-observatory.net/ By 2013, employment in green energy in Germany neared 400,000.

Interestingly Germany, along with Denmark, has also pioneered decentralized forms of ownership of the new energy technologies. For example, in Germany only about 13% of the country’s 60 GW of renewable energy generation capacity is owned by big energy companies. The rest is owned by households, communities, local co-ops, development trusts and farmers. Over 940 energy co-ops have emerged, some of them quite large, even town-sized. The old political issue of ownership and control is back on the agenda in a new form.

What happens next? Although the EU, and to a lesser extent the USA, have made much of the running in terms of green energy and green jobs so far, in the years ahead China seem likely to dominate, as it tries to grapple with the impacts of its rapid growth, pollution and the need for non-fossil fuel. That, and the wider uptake of green energy around the world, may raise a wide range of political and strategic issues – not least, what sort of jobs do we want? That is what I looked at in the chapter I wrote for a book on Engineering Ethics edited by Marion Hersh, which should be out soon. Too late to include in that, UKERC has just published an interesting study of “Low Carbon Jobs” reviewing the field. www.ukerc.ac.uk/support/Low+Carbon+Jobs

It concludes that there can be positive net job gains from investing in renewables and energy efficiency since they are more labour-intensive than fossil fuel generation. However, it adds, if there is full employment, investing in job intense options isn’t needed. That may be true in macro-economic terms but surely, as I have argued in my chapter, beyond the raw numbers there is a case for investing in better types of work based on green energy as part of a “just transition”. I will be coming back to that in a later post.

Meanwhile, see the recently published backup notes to the Green Jobs booklet produced by the Campaign against Climate Change: www.climate-change-jobs.org/.

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