Presentation at the IEA-RETD Workshop „Capitalising on...

Presentation at the IEA-RETD Workshop „Capitalising on Renewables: Short- and Medium-term Opportunities and Economic & Employment Benefits“

27 September 2012, Ottowa, Canada

The German and European RE Policy - Motivation, Targets and its Economic Implications -

Part I: Germany RE policy

Part II: BMU financed study on RE-jobs: Employment

impact in Germany (GWS)

Part III: EU financed study on RE jobs: EmployRES -

Employment impact of RES in the EU (Fh ISI)

Table of Content

Why is Germany interested in RET deployment and its economic & employment impact

Germany has legally anchored its RE policy (most relevant ones)

RE Sources Act (EEG) (for power) and RES Heat Act (EEWärmeG)

Both acts require an evaluation of the RE policy on a regular basis

Targets of these acts: Electricity share: at least 35 % of RES by 2020 (50 % in 2030;

65 % in 2040; 80 % in 2050) Gross final energy consumption: at least 18% RES in 2020. Heat share: 14% of final heat consumption in 2020

Source: BMU 2012: http://www.erneuerbare-energien.de/english/renewable_energy/data_service/graphics/doc/39831.php

Current RE use and targets in Germany:

Renewable energy sources as a share of energy supply in Germany

3.24.5

0.9

4.3

7.8

10.912.2

5.6

10.4

20.018.0 1)

10.0 1,2)

14.0 1)

minimum 35.0 1)

0

5

10

15

20

25

30

35

40

Share of RES in total grosselectricity consumption

Share of RES in totalenergy consumption for

heat

Share of RES in fuelconsumption for road traffic

in transport sector (2)

Share of RES in total finalenergy consumption

(electricity, heat, fuels)

Share of RES in totalprimary energyconsumption (3)

Shar

e in

[%]

2002 2004 2006 2007 2008

2009 2010 2011 2020

1) Sources: Targets of the German Government, Renewable Energy Sources Act (EEG); Renewable Energy Sources Heat Act (EEWärmeG), EU-Directive 2009/28/EC;2) total consumption of engine fuels, excluding fuel in air traffic; 3) calculated using efficiency method; source: Working Group on Energy Balances e.V. (AGEB); RES: Renewable Energy Sources;

source: BMU-KI III 1 according to Working Group on Renewable Energy-Statistics (AGEE-Stat); image: BMU / Brigitte Hiss; as at: March 2012; all figures provisional

Targets:

Gross final energy

Transport sector

Why is Germany interested in RE deployment and its economic & employment impact

Purpose of the policies (acts):

to ensure security of energy supplies reduce dependence on fossil fuel imports

to protect our climate and the environment mitigate climate change

to reduce the overall economic costs of energy supply, also by incorporating external long-term effects short-term cost (price volatility) and long-term effects (damages)

to conserve fossil fuels and to promote the further development of technologies for the

generation of electricity from renewable energy sources gain from first mover advantages

Projects (selected examples ongoing): Evaluation of the RES Acts: Time frame: 2–3 years, Budget: 0.5 - 1 m €

Effects of increasing RET deployment (e.g. ImpRES): Time frame: 3 - 4 years; Budget: 0.5 - 1 million € Expected outcome: costs and benefits of RE use at the micro- and macro-economic level

Effects on economic growth and employment (e.g. BMU Jobs): Time frame: 2 - 3 years; Budget: 0.5 - 1 million € Expected outcome: gross and net employment within the RE industry, impact on economy wide employment and growth (net impacts), regional impacts

Spending of the Federal Ministry for the Environment (BMU)

Increasing and large share of RES in electricity and heat generation:

Not only the environmental aspects but also economic & employment implications must be studied

Increasing policy costs of RET deployment public pressure: what are the benefits of RE?

(source: ISI et al. 2012)

Why does the BMU spend money for employment impact studies?

Significance of

RE industry is increasing – what is its contribution in terms of employment?

(source: O’Sullivan et al. 2010. 2011. 2012) (note: in total about 29 million employees in Germany)

Why does the BMU spend money for employment impact studies?

Gross employment shows the (increasing) significance of the RE

industry in Germany benefit within the RE sector

Studies show the contribution of each RE technology to employment vulnerability

Jobs per activity and general qualification structures provide information on the required qualification education

Results emphasis the relevance of exports for employment (each technology strengths but also vulnerability

The net benefit of RE use is positive

What are the results of the impact studies and how did the BMU use the results?

Make sure you distinguish between the impact on jobs in the RE

industry and economy wide jobs (in all sectors) that also includes negative effects beyond the RE sector

Use a sectoral study to understand the significance (and structure) of the RE industry and use the economy wide study (net impact study) to understand the overall economic impact

If the impact on economy wide jobs is negative balance environmental effects versus employment effects … or include CO2-costs in the model and do the assessment again!

What could other countries learn from these studies?

To conduct employment impact studies you need a sound

data base – the main challenge Collect data on total and new installed capacities, investments

in RE generation plants, turnover of RET industry, costs on construction, O&M, data an fuel supply (type of fuel supply imports. …), trade

Divide e.g. investments into cost components and allocate them across the NACE sectors

Develop a scenario for future effects that is based on international acknowledged energy and price developments

Do a survey in your domestic RE industry to get information on production structures and trade!

What could other countries learn from these studies?

The German Federal Ministry has promoted first studies on

gross employment effects in 2004, on net employment effects in 2006 (“BMU RE job study”) RET deployment jobs

The EU launched a project to assess the net impact of RET deployment for all EU member states in 2008 (EmployRES) RE policy RET deployment jobs

These two studies have been the first comprehensive net impact studies (time horizon up to 2020 and 2030)

Results of two net employment impact studies

Part II: BMU financed study on RE-jobs: Employment

impact in Germany (GWS)

Employment impacts of renewable energy increase in Germany

“ BMU RE Job Study”

Philip Ulrich Ulrike Lehr

Gesellschaft für Wirtschaftliche Strukturforschung mbH. Osnabrück

gws 2012 GWS mbH

What to find out?

Question: What labor force do we need for economic activities related to the increasing share of renewable energy (heat & power)? Number of jobs in RE industry and its upstream industry =

gross employment

Question: What is the overall balance of positive and negative economic effects of the increasing share of renewable energy (scenario analysis) Change in economy wide employment = net employment

Introduction

gws 2012 GWS mbH

Comprehensive impact study – account for ALL effects

Time horizon: 2010 - 2030

Introduction Increasing RES

Prices

International Trade

Investment, Operation and Maintenance

Exports/Imports

net effects

-

-

„Substitution“ „Budget“

positive effects

– neg. effects Non RES

RES - +

+

+ +

negative in/direct effects: e.g. investment in conventional sector

induced effect: price effect (on consumption)

gws 2012 GWS mbH

Gross employment in 2011

Results: gross employment

Gross em

ployment

Figures for 2010 and 2011 are provisional estimate; deviations in totals are due to rounding; Source: O’Sullivan/Edler/Nieder/Rüther/Lehr/Peter: "Bruttobeschäftigung durch erneuerbare Energien im Jahr 20011 – eine erste Abschätzung". as at: March 2012; interim report of research project „Kurz- und langfristige Auswirkungen des Ausbaus erneuerbarer Energien auf den deutschen Arbeitsmarkt“; image: BMU / Christoph Busse / transit

gws 2012 GWS mbH

Regional results Further resultus

43270

68850

14020

48050

12080

53710

6760

24400

21050

12380

19450

20800

2250

14340

4050

=

6490

RE-jobs per 1000 jobs in total

371,950

Geo-thermal

Biomass

Solarenergy

Wind energy

Hydropower

Total grossemployment

4.5 - 7.57.6 - 12.712.8 - 26.5

Regional significance gross employment is particularly relevant in northern and eastern parts of Germany

gws 2012 GWS mbH

Socio-economic survey results – the structure of employment

Structure of employment in the interviewed RE industry

>< average? Total RES PV Wind Heat

pumps Biomass

female < av. 23.6% 30.6% 20.0% 13.8% 18.6%

total a) 99.9% 100.0% 99.9% 100.0% 99.9%

young people in training/education (to reach ISCED 3b, 4) > av. 3.8% 3.2% 4.8% 3.0% 4.0%

temporary staffing (any ISCED) > av. 7.4% 7.3% 11.3% 7.5% 3.8%

staff w/o qualification (ISCED 2, 3a) < av. 4.1% 5.8% 0.9% 6.6% 3.1%

staff with qualification (ISCED 3b +) >av. 49.9% 47.0% 52.6% 65.8% 56.8% staff with college/university degree (ISCED 5, 6) > av. 32.1% 34.7% 27.1% 15.3% 29.7%

source: own calculations from 418 surveyed companies

a) does not necessarily add to 100

gws 2012 GWS mbH

Years reference RE-Scenario + Export assumptions

max optimistic slow min Germany

Exports (bn € 2005) 2009 2020 - 41.3 32.9 19.9 7.1 2030 - 59.1 47.8 32.7 7.1

Employment

Gross employment (1000) 2009 340 2020 6 656 582 458 339 2030 5 699 610 500 298

Net employment (1000) 2009 2020 - 141.04 104.93 42.68 -16.64 2030 - 220.05 185.62 146.31 63.20

Net employment impacts

Export matters, but in the long run ….

gws 2012 GWS mbH

Conclusions – what did we find? Conclusions

Over 380,000 (2011) jobs in the German RE- and upstream industry

(about 1 % of total employment) Regional distribution shows where the “RE-jobs” are located and

which regions needs special attention if there are changes in one of the RE industries (Northern & Eastern parts of Germany)

Sectoral jobs also provide information on the qualification education & training

Net employment impact is positive in the long run even under a pessimistic export development. Nevertheless, future net employment depends very much on: future paths of fossil prices and exports reference and accelerated deployment scenario

Extended slides are available at IEA-RETD: http://iea-retd.org/events For questions regarding the BMU job study contact: Philip Ulrich Heinrichstraße 30 D-49080 Osnabrück Fon: +49 (0)541-40933-200 Email: [email protected] www.gws-os.de/en

Part III: EU financed study on RE jobs: EmployRES -

Employment impact of RES in the EU (Fh ISI)

RE policy RET deployment employment

The Impact of Renewable Energy Policy on Economic Growth and Employment in the European Union - Summary of the EmployRES study

◄ December 2008 agreement on Renewable Energy Directive by the European Parliament and the European Council

◄ Ambitious targets for each Member State 20% share of RE in Europe's final energy consumption by 2020. Each country had to elaborate a national RE action plan how to reach this target

Individual targets and policies!

Differing policy costs!

What are the economic and employment benefits of RES use ?

Employ-RES study: duration of 3 years, 6 European partners involved, combination of 4 models, huge data set, time horizon up to 2030

Background of the study

◄ Aims of the Employ-RES study:

◄ To present an analysis of the RE policy effects on RET deployment and on employment & economic growth per RES sector, per economic sector and per country

◄ To improve understanding of gross and net employment impacts of (an accelerated diffusion of) renewables energy sources

◄ To ensure high quality results and show consistent results: two types of macro models were applied

◄ Review of results by scientists, stakeholder workshop

◄ Coordination by Fraunhofer ISI, partners involved:

SEURECO

Background of the study

◄ Expectations: To get a thorough and consistent assessment of RE policy impact on employment and economic growth (RE policy RET deployment employment)

◄ Challenges: To get reliable data and depict national structures (EU27) in the model, build interfaces between the 5 models

◄ Results :

◄ RET deployment up to 2030 as a result of different RE policies

◄ Employment in the RE- and upstream industry in 2005, 2020 and 2030

◄ Positive impact of RET deployment on economy-wide employment up to 2030

Expectations, challenges and results

◄ In general, (slightly) positive economy-wide impact in most EU countries, only in a few countries negative impacts (price effect, displaced investment)

◄ RE sectoral employment is significant, but not in all countries.

◄ Sectoral employment is in all countries larger than net employment impacts

◄ O&M and fuel supply (biomass) provide permanent employment

◄ Employment effects depend on industry structures of the respective country:

◄ large domestic fossil fuel industry negative effect

◄ large domestic biomass / fuel supply positive effect

◄ strong domestic manufacturing sector (machinery) positive effect

◄ low conventional energy prices (e.g. power) negative effect

◄ export is important for jobs in the manufacturing sector +/-

Main messages

Methodology: Overview of modelling steps (simplified)

Methodology: Overview of modelling steps (detailed)

Input/OutputModel Data source

GREEN-X database

Past & present econ. impacts

Techno-econ. coefficients

Historic RES development (capacity & cost)

AMADEUS

Stakeholder consultation

Desk research MULTIREG

Energy framework conditions

Macroeconomic impacts of RES

Economic impulses of RES perspectives

RES Scenarios (EU and global)

ASTRANEMESIS

ISI Lead Market Database

Export scenarios

1

2

3

4

1 Number of corresponding phase/chapter

WorldRESGREEN-X

Input/OutputModel Data source

GREEN-X database

Past & present econ. impacts

Techno-econ. coefficients

Historic RES development (capacity & cost)

AMADEUS

Stakeholder consultation

Desk research MULTIREG

Energy framework conditions

Macroeconomic impacts of RES

Economic impulses of RES perspectives

RES Scenarios (EU and global)

ASTRANEMESIS ASTRANEMESIS

ISI Lead Market Database

Export scenarios

1

2

3

4

1 Number of corresponding phase/chapter

WorldRESGREEN-X WorldRESGREEN-X

Methodology: Overview of relevant effects

Results: Future gross effects

Gross employment under No-Policy, BAU-ME and ADP-ME by cost types for EU 27

Future gross effects

Increase of gross employment between scenario ADP-ME and No-Policy, 2020, in absolute figures and relative to total employment (2007)

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2.00%

AT BE BG CY CZ DE DK EE ES FI FR GR HU IE IT LT LU LV MT NL PL PT RO SE SI SK UK EU27

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

empl

oyee

s

relative to total current employment, % in absolute figures

Results: Future gross effects

Difference in cross employment between ADP-ME and ADP-OE by technolgies, 2020

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

AT BE BG CY CZ DE DK EE ES FI FR GR HU IE IT LT LU LV MT NL PL PT RO SE SI SK UK

country

empl

oyee

s

Electricity Biogas Electricity Biowaste Electricity Geothermal Electricity Hydro large scaleElectricity Hydro small scale Electricity Photovoltaics Electricity Solar thermal Electricity Solid biomass

Electricity Tide wave Electricity Wind offshore Electricity Wind onshore Heat Biogas gridHeat Biowaste grid Heat Geothermal grid Heat Heat pumps Heat Solar thermal and hot water

Heat Solid biomass grid Heat Solid biomass non grid Transport Advanced biofuels Transport Traditional biofuels

Results: Future gross effects – impact of exports (moderate and optimistic)

Results: Future net employment in ADP-ME scenario by country, 2020

Source: ASTRA calculations

change in employment: ADP-ME vs no policy, 2020

-50

0

50

100

150

200

AT B+L BG CY CZ DE DK EE ES FI FR GR HU IE IT LT LV MT NL PL PT RO SE SI SK UK

chan

ge in

em

ploy

men

t in

1.00

0

Results: Macro-model comparison Astra - NEMESIS: Employment by country in ADP-ME scenario

Source: ASTRA and NEMESIS calculations

Employment change due to RES policy - ADP in 2020 Range given for the results of NEMESIS and ASTRA model

-0.5

0.0

0.5

1.0

1.5

2.0

Aus

tria

Bel

gium

+Lux

embu

rg

Cze

ch-R

epub

lic

Den

mar

k

Est

onia

Eur

ope

Fin

land

Fra

nce

Ger

man

y

Gre

ece

Hun

gary

Irel

and

Italy

Latv

ia

Lith

uani

a

Net

herla

nds

Pol

and

Por

tuga

l

Rom

ania

Slo

vaki

a

Slo

veni

a

Spa

in

Sw

eden

Uni

ted-

Kin

gdom

Cha

nge

[%]

Summary of results: Employment effects of RES policies

396

115201

417

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

Net employmentchange ASTRA

compared to "nopolicy"

Net employmentchange NEMESIScompared to "no

policy"

Net

em

ploy

men

t due

to R

ES

pol

icy

[thou

sand

] . BAU MEADP ME

2310

567

1,090

2830

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

Total grossemployment of RES

sector

Gross employmentof RES sector

compared to "nopolicy"

Gro

ss e

mpl

oym

ent o

f RES

sec

tor i

n 20

20 [t

hous

and]

.

BAU MEADP ME

Gross impact Net impact

Main messages:

Overall, net employment impact is positive but not in all countries

(exports, price effect, …)

Net employment is smaller than gross employment (EU wide) due to negative effects of displaced investment (hence jobs) in the conventional

energy sector (nuclear and fossil based) higher prices for electricity from RES consumption of other goods

decreases

Future net employment effects depend on assumption about fossil energy prices export (development of market shares) costs of conventional and RE technologies reference scenarios

► Currently the strong investment impulses - based on installations in Europe and exports to the rest of the world - dominate the economic impact. However, permanent employment will be in biomass supply and O&M

► In order to maintain this positive development (of moderate policy costs, positive net effects) in the future, it is necessary to uphold and improve the competitive position of European RET manufacturers (export) and reduce the costs of renewable energies (e.g. power price) by exploiting the full learning potentials support policies need to be improved to stimulate the development of innovative technologies appropriately (competitiveness and price effect)

Main messages:

Thank you for your attention

Dr. Barbara Breitschopf Competence Center Energy Policy and Energy Markets

Fraunhofer Institute for Systems and Innovation Research ISI Breslauer Str. 48. 76139 Karlsruhe. Germany

Phone: +49 (0)721 6809 356 mailto:[email protected]

http://www.isi.fraunhofer.de

mailto:[email protected]�

http://www.isi.fraunhofer.de/�

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