Employment creation in EU related to renewables expansion

Abstract

Expansion of renewable energy is a key element in the EU Energy and Climate policy framework, as is contributes to Greenhouse Gas reduction and improved energy security, while they can also create employment opportunities. There has been an intense debate on the quantification of these employment effects. Most studies have focused on estimating gross employment impacts and ignored the effects between different sectors, while they commonly use aggregate data and sectoral classification. This paper investigates the net employment impacts from the projected transformation of the EU energy sector towards Renewable Energy Sources (RES), by combining the employment factor approach and general equilibrium analysis. Detailed, up-to-date data at a very disaggregated level are used to compare the labour intensities of RES relative to fossil fuels and assess the employment impacts of the recent Clean Energy Package proposals. RES technologies are estimated to be on average more labour intensive and have a higher domestic job content relative to fossil fuels. The low-carbon transition would lead to the net creation of 200,000 direct jobs in energy sectors. Direct RES jobs represent about 1% of the EU workforce in 2050 and are mostly created in the construction of solar photovoltaics, the supply and production of advanced biofuels and in the manufacturing and installation of wind turbines. In contrast, employment would be eliminated in conventional energy supply sectors, especially in coal mining (which is a labour intensive activity), refineries and refuelling stations. The economy-wide general equilibrium modelling confirms the positive employment impacts of RES expansion and shows that the low-carbon transition would lead to the reallocation of 1.3% of the EU’s workforce across sectors by 2050.