Employment effects of the renewable energy transition in the electricity sector: An input-output approach

The employment impacts of the transition to a post-carbon economy are gaining increasing attention. The post-carbon transition implies fundamental changes in the economy followed by significant changes in the structure of labour demand. Industries with the highest carbon footprint are of utmost importance because of the large expected changes in supply chain structures forced by decarbonisation. The power industry is a crucial component of the transition since its decarbonisation can also help other sectors (such as transportation) switch to cleaner energy fuels. Renewable energy sources are promising technologies that could significantly help foster transition in the energy sector and to provide energy with almost zero greenhouse gas emissions. Restructuring away from fossil fuels will bring about associated job losses in non-renewable energy sectors together with job gains in the renewable energy ones. Building energy infrastructure with a significantly higher share of renewables will also require significant capital investments in new facilities, possibly further fostering employment. Understanding the overall net effects on employment (i.e. job gains vs. job losses) would help inform transition policies in order to design policies guided not only by environment and climate but also by social considerations. To estimate the net effects on employment related to the increasing share of renewable energy, we develop a forward-looking multi-regional input-output model that takes into account the labour demand associated with capital investments in renewable energy infrastructure, separately from operation and maintenance. Modelling capital formation separately allows for a more precise assessment of the changes in labour demand needed to deal with the transition and can better inform related adaptation policies. The modelling consists of gradually replacing the production of electricity from non-renewable energy sources with production from renewables by comparing the effects of two scenarios in five-year intervals until 2050. The model focuses on changes in the European Union (EU) plus the United Kingdom (UK) and shows the net effects on the number of jobs by skill level (low-, medium- and high-skilled) and gender, by industry group and by country.