EMPLOYMENT EFFECTS OF ELECTRICITY

GENERATION FROM RENEWABLE ENERGY

TECHNOLOGIES IN THE UK

C. Oliveira
1,2
, N. Cassidy
3
, D. Coelho
2,4

1
Polytechnic Institute of Coimbra, ISCAC, Portugal
2
INESC Coimbra, Portugal
3
Maastricht University
4
Polytechnic Institute of Coimbra, ISEC, Portugal


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OUTLINE
MOTIVATION
METHODOLOGIES TO ESTIMATE EMPLOYMENT EFFECTS
THE RENEWABLE ENERGY SECTOR IN THE UK
METHODOLOGY
Data: limitations and assumptions

ILLUSTRATIVE RESULTS

CONCLUSIONS AND FURTHER RESEARCH

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MOTIVATION
20% reduction in GHG
emissions
20% increase in the share
of renewable energy
Increase in electricity
generated from RETS
(29GW by 2020 in the UK)
Benefits
Global Warming


Energy Security

Employment
??
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MOTIVATION (UK)
UK commitment to reduce GHG emissions by at least 34% compared to
1990 levels and to increase share of RE to 15% by 2020 (UK
Government, 2013).

European Renewable Energy Council (EREC, 2013) recently ranked the
UK 25
th
out of 27 member states on its progress in meeting the RE
target for 2020.

In 2010 it was only 3.3% (54TWh) of energy consumption came from
renewables and UK was the only country that did not achieve its first
interim target under the Directive by the end of 2011 (4.04% for 2011
to 2012) (EREC, 2013).

In 2012 contribution of RES to electricity generation stood at 11.3%
(DECC, 2012).

Assessment of employment impact of growth in RES in UK is highly
complex, namely considering future support and investment in this
sector remains uncertain.
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METHODOLOGIES TO ESTIMATE EMPLOYMENT EFFECTS

Green Jobs (Different Concepts)
Green Job is used to conceptualise the perceived cross over of interests between
the environment and employment.












Without a common definition of what a green job is, quantifying employment
benefits, associated with a transition to a low carbon economy, is especially difficult.

ECORYS (2008) gross employment forecasts for Europe in the year 2020 range
between 2.3 million to 21 million!!!



Entities Definition
UNEP (2008) Work in agricultural, manufacturing,
R&D, administrative, and service
activities that contribute substantially
to preserving or restoring
environmental quality.
EUROSTAT (2011) Environmental Goods and Service
Sector as a heterogeneous set of
producers of technologies, goods and
services ... that seek to protect the
environment or minimise the use of
natural resources
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Employment Estimates and Renewable Energy Sector

Difficulty in arriving at employment estimates can be seen when
looking at one sub-group of green jobs those in RET.

Two methods are commonly used:
















METHODOLOGIES TO ESTIMATE EMPLOYMENT EFFECTS

IO Method Analytical
Survey Data

Direct impact only

Best suited for quantifying job
effects of a precise energy project
or industry
IO Table

Direct, Indirect and Induced effects

Best suited for quantifying job
effects at national or regional level

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Criticisms of Employment Estimates

Different methodologies are used and not clearly defined
making it difficult to compare employment estimates.

Employment benefits are over estimated due to the assumption
that RES jobs are labour intensive.

A positive employment outcome depends heavily on Climate
Change targets being achieved and a suitable policy
environment.

Hence broad sweeping claims that there will be a positive
employment outcome should not be made the outcome will
be context specific!!!



METHODOLOGIES TO ESTIMATE EMPLOYMENT EFFECTS

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THE RENEWABLE ENERGY SECTOR IN THE UK
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Study Methodology Employment Estimates
Department of Trade and
Industry (DTI, 2004)
Analytical 17,000 to 35,000 jobs per
year up to 2020 if the
goal of 20% RES is met
Renewable Energy
Association (REA, 2012)
Evaluation of business
registers and case studies
2010/2011 the RES sector
supported 110, 000 jobs
and by 2020 it could
support 400,000 jobs
Breitschopf et al. (2012) IO 2009 RES-E industry
employed 16,000
persons
Marsh and Miers (2011) IO considering the
amount of jobs that could
have been created if the
subsidies received by RES
were spent elsewhere

For every job created in
RES in the UK, 3.7 jobs
will be lost elsewhere
THE RENEWABLE ENERGY SECTOR IN THE UK
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How many jobs will be created in the UK from increasing the share
of renewable energy in the generation of electricity?
Total Number of Jobs Type of Job
Are the workers adequately prepared and protected?
Direct impact on the renewable energy
sector due to an increase in final demand for
renewable energy

Indirect impact on other sectors due to an
increase in final demand for renewable energy
Installation the manufacturing and build of
renewable energy technologies

Operational the maintenance and day-to-day
operation of renewable energy technologies

Fuel input Bioenergy requires fossil fuel
energy as an input into its production

Research Question
THE RENEWABLE ENERGY SECTOR IN THE UK
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Methodology: Application to RES-E in the UK
Match the domestic output of each
relevant activity/ component of RET to
industry in I-O table

Calculate total output of each relevant
activity/ component

Decompose phases into their
activities/components

Divide into life cycle phase
Installation
Operation
Fuel (for Bio energy)
For example, installation of offshore wind can be broken down
into the manufacturing of rubber and plastic, transportation etc.
Total expenditure connected to each life cycle phase
Cost share of each relevant activity/component as % of life cycle
phase
Calculation slightly different depending on life cycle phase


For example, transport (activity) used in the construction of
offshore wind (life cycle phase) is split between the industry
Land Transport (30%) and water transport (70%)

Calculate the employment effect of
each activity/component
Use corresponding labour coefficient to calculate direct
employment effect
Exploit the Leontief Matrix, using the employment multipliers, to
arrive at indirect employment effect
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Methodology: Application to RES-E in the UK
Data: limitations and assumptions

Limitations Assumptions



UK most recent IO table is for 2005.

World Bank (2011) acknowledges IO
data from one country can be applied
to another so long as this application
can be justified, i.e. the production
processes (labour and capital inputs)
are similar.

Use the Scottish IO table for the year
2009.
UK (including Scotland) use a different
classification system (SIC - Standard
Industrial Classification vs. NACE -
Nomenclature statistique des activits
conomiques dans la Communaut
europenne).
Industries of the Scottish IO table
were changed in line with the NACE
classification system.
Data in columns and rows of had to
be carefully merged to make new IO
table.
Unknown when the increase in
renewable energy will take place to
reach 2020 target.


1
st
) Employment estimates provided
are based on the assumption that each
individual RET target will be met.
2
nd
) Employment estimates if electric
capacity of RET combined for the year
2020 was 29GW only.
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Methodology: Application to RES-E in the UK
Data: Assumptions

Department of Energy and Climate Change has set a minimum target for
renewables to deliver 29GW of electricity capacity in the UK by 2020 (an
increase of 21 GW from 2009).
13 GW 11.9GW
11.6 GW
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Illustrative Results
1
st
) Results: Total employment by life cycle phase 2020
(when individual targets are met)
37.148
21234
6941
22.142
5431
3103
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
Installation of new
facilities
Operation of
facilities
Fuels
E
m
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p
e
r
s
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n
s

Indirect
Employment
Direct
Employment
95,999 jobs, with 65,323
direct and 30,676 indirect.

Installation of new
facilities accounts for the
majority of jobs - 59,290.

Indirect employment
effect is larger for the
installation compared to
operation

Fuel is only an input for
bioenergy, the number of
associated jobs is relatively
small - 10,044
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Illustrative Results
Although installed
capacity of onshore wind
and PV is greater than for
offshore wind, the latter
technology is expected to
create largest number of
direct jobs.

Offshore wind is one of
the most physically
demanding RET to construct
as well as operate, especially
the further offshore and
remote the marine
environment is.
1
st
) Results: Total direct employment by technology 2020
(when individual targets are met)

0 5.000 10.000 15.000 20.000
Geothermal electricity
Hydropower large
Hydropower small
Solar thermal electricity
Photovoltaics
Tidal and wave electricity
Wind - Offshore
Wind - Onshore
Biogas (incl. CHP)
Biomass small scale (incl. CHP)
Biomass large scale (incl. CHP)
Biomass co-firing (incl. CHP)
Biowaste (incl. CHP)
Installation of new facilities
Operation of facilities
Fuels
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Illustrative Results
Overall PV is expected to
create the largest number of
jobs - 27,085.

1
st
) Results: Total indirect employment by technology 2020
(when individual targets are met)

0 2.000 4.000 6.000 8.000 10.00012.000
Geothermal electricity
Hydropower large
Hydropower small
Solar thermal electricity
Photovoltaics
Tidal and wave electricity
Wind - Offshore
Wind - Onshore
Biogas (incl. CHP)
Biomass small scale (incl. CHP)
Biomass large scale (incl. CHP)
Biomass co-firing (incl. CHP)
Biowaste (incl. CHP)
Installation of new facilities
Operation of facilities
Fuels
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Illustrative Results
2
nd
) Results: Total employment by life cycle phase 2020
(when the overall target of 29GW is met)
59,143 employed
persons, which is
considerably less than the
95,999 originally estimated
22.099
13689
4431
13.469
3501
1954
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
Installation of
new facilities
Operation of
facilities
Fuels
E
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p
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r
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n
s

Indirect
Employment
Direct
Employment
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CONCLUSIONS AND FURTHER RESEARCH
Employment estimates are based on assumption that the 2020 RET individual targets will be met
(best-case scenario) - With UK government failing to keep on top their RE commitments, RE jobs
could be considerably less.

Majority of jobs would be in installation of new facilities, and many of these are likely to be only
temporary, as opposed to in operation and maintenance, where the jobs are more permanent.

Labour intensity of renewables tends to decline as experience in installing and operating the
technology increases.

Further effort to revise and collect data that is necessary for producing employment estimates is
encouraged so as to put an end to the disparities currently haunting the literature.

An up-to-date IO table and cost structures of RET would help to improve the accuracy of
estimates which are derived from an IO analysis.

IO tables would be expanded to allow for the inclusion of RES as its own separate industry.

UK and Scottish National Statistics Office ought to consider using the NACE classification
system when constructing the tables to allow for cross country comparisons to be made.
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CONCLUSIONS AND FURTHER RESEARCH
It is recommended that future research is concentrated also on establishing the net effects.

Recent attempts to provide net employment estimates in the UK are not overly
reliable.

The need for a stable policy environment is therefore crucial not only for ensuring any
employment benefits are optimised but also to enable a full assessment of what the
expected consequences, both positive and negative, will be for employment.

It is important to know what type of skills are needed to perform these roles.

This kind of information has been limited largely because of the unpredictability
associated with the transition and also because it is likely that the skill needs will be
different according to local contexts.

Finally, it is increasingly recognised that along with determining the quantitative impact on
employment, the qualitative impact also needs to be addressed to fully appreciate the
consequences of moving to a low carbon economy.