Renewable energy, now with value added

The renewable energy industry is one of Europe's fastest growing sectors, such that policy makers have now begun to recognise that there are additional economic benefits to be had. During 1998-9, a study carried out by a consortium of organisations led by ECOTEC Research & Consulting set out to answer the question: "Will investment in renewables lead to economic growth?"


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The rationale for the promotion of renewable energy technologies in the EU has focused around their potential contribution to energy security and the environment. Increasingly, however, there is a realisation that the widespread deployment of renewable energy technologies has the potential to offer additional benefits, such as improved industrial competitiveness, the development of a strong export industry, regional development and the creation of employment – especially in more remote areas. Agricultural regions in particular can benefit from stimulation of biomass industries to halt the decline in jobs, by encouraging a switch from traditional food crop production to non-food biomass production.

The European Commission, in its White Paper and Action Plan on Renewable Energy Sources in 1997, proposed an objective to double the contribution of renewable energy in Europe by 2010, to 12% of gross inland consumption. The Campaign for Take-Off, launched in 1999, presents detailed priorities for initiatives to achieve this objective. The rationale for the Action Plan is driven not only from the environmental dimension, but also recognises the important economic, employment and social benefits that an increase in renewable energy use can bring.

A number of studies have looked at the impact of renewable energy on patterns of employment – these have generally investigated the effects of renewables either at the individual technology level, or in a specific region or country. Most studies have generally focused on the direct employment benefits from renewable energy; i.e. they considered jobs at the plant level, and/or in manufacturing and associated industries. However, such studies have not generally identified the implications on employment from a subsequent decrease in energy used from conventional sources; nor have they considered the economic impacts of the (sometimes considerable) levels of subsidy provided to renewables on the rest of the economy.

There is, therefore, a need to provide quantitative information to policymakers involved with renewable energy and interested in its impact on the wider economy – for example, what kind of impacts occur in terms of jobs/GWh output or jobs/MW installed, as a result of investment in renewable energy?

Renewable energy is now recognised as an important mainstream industry, and as such it must therefore compete with other sectors for public and private investment. A detailed understanding of the economic benefits provided from renewable energy is important for decision-makers in national, regional and local planning.

To this end, a study was carried out during 1998-9 to evaluate and quantify the employment and economic benefits of renewable energy in the EU. The study, funded by the European Commission through the ALTENER programme, was initiated by EUFORES and carried out by a consortium of organisations led by ECOTEC Research & Consulting Ltd. The study set out to answer the question: “Will an investment in renewables lead to more jobs and economic growth?”

This type of analysis had not been carried out before at EU level. One of the principal objectives of the study was therefore to develop a methodology that could calculate the economic and employment impacts of investment in new renewable energy technologies. This methodology could then be combined with an existing energy model predicting future penetration levels of renewables in the EU, to determine the impacts of an increase in renewable energy on employment.

Energy produced from renewable sources is predicted to increase by a factor of about 2.4, from a base of 440TWh in 1995 to 1,066TWh by 2020. The study predicts increases in the capacity and output of all the renewable energy technologies studied (see table, left), and in all Member States. These predictions also represent an increase in the overall proportion of final energy consumption in the EU provided by renewables from 4.3% in 1995 to 8.2% by 2020.

The predictions estimate that this increase in energy provided from renewable sources can result in the creation of over 900,000 new jobs by 2020. Around 385,000 jobs are predicted to be created by 2020 from provision of renewable energy, and a further 515,000 jobs from biomass fuel production. This increase takes account of the direct, indirect and subsidy effects on employment, and jobs displaced in conventional energy technologies.

Jobs gains are greatest from biomass technologies – both in the biomass energy industry and in fuel supply – however, all technologies show long-term net job creation.

Renewable energy technologies are in general more labour intensive than conventional energy technologies in delivering the same amount of energy output. Thus, jobs displaced as a result of subsidies to support renewable energy deployment are significantly less than corresponding job gains elsewhere in the economy.

Job gains are greatest in the agriculture and manufacturing industrial sectors. The conventional energy supply industry is predicted to lose less than 2% of its work force by 2020 as a consequence of the shift to a greater use of energy from renewable sources.

All technologies generate a net increase in jobs during the construction phase. For some technologies, however, there are net employment losses during the operational phase.

Employment creation occurs in all Member States. Germany, France and Italy have the greatest absolute employment increases, whilst Denmark, Greece and Austria achieve the highest proportional increase relative to the size of their labour force.

The results from the study will be of practical interest to many different groups, including policy makers, the renewable energy industry, regional and local authorities and investors, and will help to raise general awareness about the employment benefits from renewable energy.

Predicted capacity and output of each renewable technology to 2020.

Capacity

1995

2000

2005

2010

2020

Solar

thermal electricity

0.00

0.09

0.18

0.20

0.20

PV

electricity

0.04

0.34

0.82

2.15

10.43

Solar

thermal heat

2.56

3.18

5.59

8.01

13.97

Onshore

Wind

2.48

7.80

18.60

31.15

50.07

Offshore

Wind

0.00

0.14

1.02

1.31

2.30

Small

Hydro

9.35

10.99

13.37

14.64

15.87

Biomass

liquid (GW eq.)

0.15

0.75

3.88

7.68

13.42

Biomass

anaerobic

8.12

10.19

16.08

21.58

26.77

Biomass

combustion

170.09

181.58

204.27

221.28

236.33

Biomass

gasification

1.64

1.86

3.92

5.38

6.36

Total

194.43

216.91

267.73

313.37

375.73

 

 

 

 

 

 

Output

TWh

 

       

Solar

thermal energy

0.00

0.03

0.07

0.08

0.08

PV

electricity

0.04

0.31

0.87

2.30

10.14

Solar

thermal heat

3.15

3.87

6.84

9.68

16.32

Onshore

Wind

3.55

22.21

39.84

62.07

88.96

Offshore

Wind

0.00

0.54

4.23

5.41

9.56

Small

Hydro

38.78

46.19

56.78

60.77

65.14

Biomass

Liquid

1.21

5.93

30.00

58.40

102.14

Biomass

anaerobic

19.43

30.01

57.15

82.94

106.92

Biomass

combustion

367.51

412.76

496.33

562.90

630.61

Biomass

gasification

6.56

8.14

20.95

30.20

36.37

Total

440.24

529.99

713.06

874.74

1066.24


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