Low carbon jobs: the evidence for net job creation from policy support for energy efficiency and renewable energy

Mr Jamie Speirs, Imperial College London

William Blyth, Oxford Energy Associates

Robert Gross, Imperial College London

The objectives of this study are to:

·     clarify the conceptual, definitional and methodological issues in the low carbon jobs debate;

·     identify the strengths and weaknesses of different methodological approaches;

·     assess the level of the uncertainty associated with these estimates and the factors contributing to that uncertainty;

·     identify the different assumptions and the reasons for their conclusions;

·     identify the research and data gaps; and

·     draw conclusions on the employment implications of selected climate policies, including the conditions under which they may lead to net job creation in OECD economies over the short, medium and long-term.

Evidence from the literature suggests a reasonable degree of confidence in the conclusion that renewables (RE) and energy efficiency (EE) are more labour intensive in terms of electricity generated or saved than traditional fossil-fuel generation (see Figure 1). The quality of gross jobs estimates varies, but many studies are robust, involving substantial surveys of the relevant industries. Overall, the evidence therefore points towards the potential for RE / EE to be able to create jobs in the short-term under conditions of suppressed aggregate demand (such as during or post-recession).

However, in the longer-term the effect on energy prices and household expenditures needs to be taken into account. There are many fewer macro-economic studies of jobs impacts of RE & EE, and they show more mixed results. Some studies using computable general equilibrium models indicate positive employment impacts, some negative, whilst others show positive impacts during the early stages of project development, transitioning to negative impacts at later periods once price effects have filtered through.

In the long-term, ‘job creation’ ceases to be a meaningful concept if economies are assumed to migrate towards equilibrium conditions. A more important consideration for RE policy is their impact on dynamic economic efficiency. A high labour intensity is not an advantage in this regard since it implies low labour productivity. However, the main dynamic benefits of renewable energy do not lie in the domain of employment policy, but in the domain of energy policy, namely their role in the transition to a low-carbon energy system. This points to the limitations of using the green jobs debate as a vehicle for discussing the long-term role of RE in the energy system.