What Do We Know About “Green Jobs”?

While the potential role of ‘green jobs’ is hotly debated, many participants in this debate are talking past one another – starting from different assumptions and definitions, working from different datasets, or hailing from opposite ideological viewpoints on the “true” costs of unmitigated greenhouse gas emissions.

A review of the literature provides evidence that clean energy policies and investments can help create job opportunities and competitive gains for the economy. These findings should heighten the demand for policies and investments that hasten a shift to a low-carbon economy and the creation of more clean-energy jobs.

The Current Evidence

Independent reports and studies on trends in the clean energy industry have found that the renewable energy sector generates more jobs per megawatt of power installed, per unit of energy produced, and per dollar of investment, than the fossil fuel-based energy sector.¹ This evidence has been substantiated by more recent assessments by the United Nations Environment Programme, International Labour Organization, and national studies in Europe, Australia, Canada, and the U.S.

These assessments have collectively surveyed existing research on domestic and international clean energy job creation, interviewed executives of low-carbon industries, reviewed existing government policies to invest in low-carbon industries, and even estimated domestic jobs that could be produced by aggressive climate and clean energy policies in other countries. While they employ a wide range of methodologies and definitions for “low-carbon”, “clean” and “green” jobs, the basic findings highlight the potential opportunities of a low-carbon transition.

Most job assessments to date have focused on job creation at the national level to generate data that is anchored in national policy objectives. Examining the potential opportunities for the U.S:

• Clean energy investments can create more jobs. The clean energy sector generates more jobs per dollar of investment than the fossil fuel industry.² This is especially the case when the full value chain is considered. Evidence from specific clean energy sectors, such as solar PV, shows job generation potential in research, project development, installation, operations and maintenance from installing solar. Even if some of the components are imported, local jobs are still created.

• The new jobs are associated with increased manufacturing and export. According to a 2011 study by the Brookings Institution and Battelle, roughly 26 percent of clean economy jobs in the U.S. are in manufacturing versus 9 percent in the broader economy and, on average, exports per job in this sector are roughly twice the value of those for a typical U.S. job. This is significant since the U.S. manufacturing sectors have been hardest hit by both the recession and outsourcing. In addition, increased exports contribute positively to the balance of trade, especially since over 85 percent of the global market for clean energy technologies lies outside of the U.S.

• Clean energy investments provide jobs for low- and middle-skilled workers. New clean energy jobs can be filled by workers that need the opportunities most. The assessment by Brookings and Battelle cited above found that the median wages in the “green” economy are higher than in the national U.S. economy as a whole, even though a higher proportion of workers have relatively little formal education.

• Within the “green” economy, newer “clean-tech” segments and associated investment opportunities create the fastest job growth opportunities. Although the bulk of current U.S. “green” jobs lie in established sectors such as construction and building-related segments that suffered during the U.S. real estate crash, the fastest job growth in the green economy occurred in the clean energy or “low-carbon” sectors of wind energy, solar PV, and smart grids. These sectors helped the green economy to outperform the nation during the recession despite the slower aggregate growth of the clean economy compared to the national economy between 2003 and 2010.³

• The clean energy industry has the potential to become one of the world’s biggest industries by 2020. Studies by HSBC and WWF project that the low-carbon energy market could range between $1.5 trillion and $2.3 trillion by 2020, depending on the stringency of climate policies.⁴ A Pew report estimates the potential for investment in clean power at as much as $2.3 trillion over the next ten years if clean energy policies are strengthened significantly. A number of policymakers around the world have seized the opportunity to drive the development of clean energy and energy efficiency in an attempt to produce dividends in employment and economic growth. This is currently being led by countries such as Germany, China and South Korea. In contrast, last summer the head of Deutsche Bank’s Asset Management Division publically admonished the U.S. Congress for failing to pass climate legislation, citing this as the reason why less than 1% of their $6 to $7 billion in clean tech investments originates in the U.S.

More Than Jobs Are at Stake

Job creation is just one potential near-term benefit of the transition to a low-carbon economy. The underlying reason for making the transition is to avoid or reduce the costs to public health, agriculture, infrastructure and the environment that will result if greenhouse gas emissions continue to rise and climate change continues unabated. Additional benefits could include domestic and foreign investments in innovation and new technologies and reduction of fossil-fuel imports.

The regional effects of policies spurring investments in relatively new clean energy sectors will be uneven. Some of the job gains from clean energy investment will be offset by losses in fossil fuel sectors and those sectors most sensitive to fossil fuel prices.⁵ Any such losses, however, are dependent on the rate at which clean energy technologies become cost-competitive and the ability to increase energy efficiency, making policies that can help reduce the cost of clean technologies and increase efficiency investments more important. Concerns about regional disparities must also be weighed against the additional benefits associated with clean energy jobs, such as innovation, increased exports, reduced vulnerability to volatile fossil fuel prices, and energy security.

Job numbers are hard to compare across countries due to varying assumptions, definitions and methodologies. The biggest challenges in jobs assessments are defining the boundaries for what types of jobs to include, how far along the supply chain to go, and what indirect benefits or costs to include. In addition, quantifying the costs or benefits of these potential jobs is difficult because jobs created cannot be viewed in isolation. Relevant and reliable data on these jobs is also scarce, so estimates often rely primarily on industry surveys.

Initiatives to track green jobs more systematically are emerging, including the green jobs initiative of the Bureau of Labor Statistics (BLS) in the U.S. However, comparable information at the international level is lacking, on both job and non-job indicators of low-carbon competitiveness. A new effort by WRI in partnership with independent policy institutes across the world, the Open Climate Network, aims to help fill this gap.