Employment effects of renewable energy deployment – the policy maker’s view

Kristian Petrick

IEA-RETD Operating Agent / All Green Energies, Barcelona

Ecomod, 5 July 2012

Sevilla, Spain

www.iea-retd.org 2

Agenda

� IEA-RETD – Background information

� EMPLOY guidelines and results – the policy maker’s view

IEA-RETD EMPLOY project

www.iea-retd.org 3

RETD stands for“Renewable Energy Technology Deployment”.

IEA-RETD is a policy-focused, technology cross-cutting platform (“Implementing Agreement”) under the legal

framework of the International Energy Agency.

Background IEA-RETD

� Created in 2005, currently 9 member countries: Canada, Denmark, France, Germany, Ireland, Japan, the Netherlands,Norway, UK.

� IEA-RETD commissions annually 5-7 studies bringing together the experience of some of the world’s leading countries in RE with the expertise of renowned consulting firms and academia.

� Reports and handbooks are freely available at www.iea-retd.org.

� IEA-RETD organizes workshops and presents at international events.

The mission of IEA-RETD is to accelerate the large-scale deployment of renewable energies

www.iea-retd.org

• Financing Renewable Energy

• Costs of Inaction

• Innovative Business Models for RE in the Built Environment

• RE for Remote Areas and Islands

• Use of RE in Road Transport

• Securing the supply chain for wind and solar energy

• Methodological guidelines for estimating the employment impacts of RE use - EMPLOY

• Optimised use of RE through improved system design

• Renewable Energy and Water

• Linking RE Promotion Policies with Intern’l Carbon Trade

• Cost and Business Case Comparisons of renewable vs. non-renewable technologies

• Communication Best Practices for RE

• ….

IEA-RETD runs various projects covering a wide range of thematic areas

Background IEA-RETD

Thematic Areas Projects 2010 - 2015

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RETD activities 2011 - 2015

Financing Renewable Energy – Key challenges for large-scale deployment (2011-12)

�Required funding for financing large-scale deployment of RE projects remain significantly larger than levels invested to date.

Outcome

�RE should be part of a robust economic development strategy

�Proven mechanisms should not be abandoned, but new policies have to reduce the risk-to-reward ratio to enhance private sector investor confidence.

Costs of Inaction (2011)

A more complete cost and benefit assessment of energy system decarbonization needs to account for the indirect costs of retaining the traditional (fossil fuel-based) energy system.

Outcome

�Adaptation, damages and fossil fuel dependence costs are significant, underappreciated and underestimated. Combined, theyare likely on the order of $1 trillion/yr.

�Mitigation investments can be “paid for” by reducing those costs.

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EMPLOY Study – Methodological guidelines for estimating the employment impacts of RE

� IEA-RETD commissioned the EMPLOY study to develop a transparent set of guidelines to calculate the employment effects of RET deployment.

� Task 1: Assess available employment studies to define pillars of methodology.

� Task 2: Develop guidelines

� Task 3: Test guidelines for IEA-RETD countries (and Tunisia)

� Authors:

� Barbara Breitschopf , Fraunhofer Institute, Germany

� Carsten Nathani, Rütter + Partner, Switzerland

� Gustav Resch, Vienna University of Technology, Austria

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Background IEA-RETD

The goal is that the guidelines will be widely usedand further improved.

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Agenda

� IEA-RETD – Background information

� EMPLOY guidelines and results – the policy maker’s view

IEA-RETD EMPLOY project

www.iea-retd.org 8

IEA-RETD commissioned the EMPLOY project to provide a common methodological basis

� Over the last 10- 15 years many employment studies have been carried out –EMPLOY looked at over 50 studies. .

� No uniform/coherent way to calculate employment effects, too much simplification in gross and net studies, lack of data

� Use of different data and methodologies make it difficult to compare results.

Therefore EMPLOY has been initiated to give guidance to policy makers

Introduction

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Employment studies help shaping consistent policies if put into a broader context and political vision

� Policy makers want to and have to understand the impacts of their policies.

� Knowing RE policy impacts on employment are important to

� Justify and enhance RE policies

� Make stakeholders aware of opportunities and potential bottlenecks

� Conduct reality checks on the feasibility of RE deployment

� Smoothen the impact in negatively affected sectors and/or regions

� Foster a broader national socio-economic and environmental debate (incl. industrial policies, development plans, R&D strategies, etc.)

� In the end, policy makers want concrete figures.

� Those figures are, however, difficult to obtain. It should be which elements are part of a figure, and which ones not.

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Employment Studies – what for?

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Guidelines help policy makers to define scope and objectives of employment studies

� Policy makers usually outsource employment studies to specialists.

� However, they have to define ToR and understand implications.

� Not all specialists consult their clients on the pros and cons of different approaches.

� Not in all countries or at all governmental levels (regional, local) methodological knowledge is available

� EMPLOY guidelines: Part for policy makers to select the methodology and part for specialized institutes with more details

The guidelines help to quickly understand methodological optionsand their pros and cons

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Employment Study Guidelines – why?

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Are renewables leading to new jobs or not? Two opposite opinions

Group A:

�RE generate additional employment as decentralised RE is more labour intensive compared to conventional energy.

�-> Job gains are greater than job losses.

Group B:

�RE lead in general to higher energy generation costs for the society, which results in lower purchasing power and consequently lower employment and a lower GDP.

�-> For the economy as a whole, a shift towards RE leads to job losses

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Employment Effects of RE

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Credible employment studies show that RE have positive effects

� Gross employment studies show that deployment of RE contributes positively to employment.

� Net employment studies calculating the full employment effects also show a positive impact on jobs – even if it may not be large.

� Due to e.g. job losses in conventional energy sectors

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Employment Effects of RE

Most employment studies support the hypothesis of gross and net employment generation through RE deployment.

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The few studies available showing negative net effects were clearly driven by lobby interests

� Within the last 3 years, there have been two studies showing negative net effects (one on Spain, one on Germany by RWI).

� Both were paid by theInstitute for Energy Research, an American lobby organization.

� Policy makers have to know the assumptions and the background of a study.

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Employment Effects of RE

Most of the research community says that there have been no serious studies showing negative impacts.

www.iea-retd.org

Renewables create employment – but jobs cutsin the fossil energy sector will trigger opposition

“The metal workers destroy our workplaces”

“Save the

hand axe industry!”

“Union Stone and Axe:

Maintain the subsidies”

“Save us”Greser & Lenz, Kunstmann Verlag

Employment Effects of RE

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Further research on the employment effects of RE will be required

� The EMPLOY guidelines will help to increase the quality of employment studies and transparency.

� Policy makers will need reliable facts and figures to improve policies.

� Overall most employment studies support the hypothesis that renewables create jobs – and the net effects will increase with declining RET costs.

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Conclusions

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The EMPLOY study and guidelines are availabe online

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For additional information on IEA-RETD

Online: www.iea-retd.orgContact: IEA_RETD@ecofys.com

kristian.petrick@allgreenenergies.org

THANK YOU!

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Back-up

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Renewable Energy Deployment Drivers

� The need to address climate change caused by fossil fuel emissions

� The concern about security of energy supply

� Fluctuating and increasing fossil-fuel prices

� Easily extractable oil and gas resources are becoming scarce

� Threats against oil and gas supply and dependency on imports

� The potential of a “green economy” to address the economical crisis and ensure prosperity

� The need for a basic access to energy for millions of people.

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Background IEA-RETD

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RETD activities 2011 - 2015

RE for Remote Areas and Islands (2011-12)

Many remote areas have already reached and passed “grid parity” for renewables. However, many economic and non-economic barriers remain.

Outcome

�Remote areas can be ideal testing grounds for emerging technologies or RE integration strategies

�Governments can support RE deployment in remote areas by scaling back fossil fuel subsidies

Innovative Business Models for the RE in the Built Environment (2011-12)

Lack of awareness, perception of costs and objectively high costs for certain renewable/efficient prevent the accelerated uptake of RE technologies in the built environment.

Outcome

�Business models like ESCos, PACE or on-bill financing can play an important role but they cannot address all barriers.

�A strong complementary role of policy makers is required.