You Think Green Jobs Can’t Grow?
Overall worldwide job growth may be sputtering, but one industry just keeps churning out new jobs – renewable energy. The renewable energy sector employed 8.1 million people, directly or indirectly, in 2015. In addition, large Hydropower accounted for another 1.3 million direct jobs in 2015, according to the International Renewable Energy Agency’s (IRENA) Renewable Energy and Jobs – Annual Review 2016. Several major trends have been outlined. An ever-expanding amount of green jobs across the globe, a clear shift toward developing economies, the chilling impact policy uncertainty has on green growth, and a looming shortage of skilled workers in many renewable energy technologies. Countries with the highest number of renewable energy jobs are China, Brazil, the United States, INDIA, Japan and Germany. Jobs continue to shift towards Asia and the share of the continent in global employment increases to 60%…
Renewable energy markets and employment continued to be shaped by favourable policy frameworks in several countries, regional shifts in deployment and increased labour productivity. Enabling policy frameworks remained, indeed, a key driver of employment. In India, for example, national and state level auctions put ambitious solar targets into action and created jobs. Wind energy auctions in Brazil, coupled with financing rules to encourage local content, created job opportunities throughout the value chain. In the United States, federal investment tax credits, working in tandem with state level net metering and renewable portfolio standards, helped sustain the growth of jobs in the solar industry.
Driven by favourable policies and declining technology costs, rising deployment of renewables in Asian markets kept driving the regional shifts in job numbers from Europe. Increased demand in Asian markets created employment opportunities in the installation segment of the value chain, and fostered domestic equipment manufacturing in some countries. Production of solar PV equipment, in particular, continued to be concentrated in manufacturing hubs such as China and Japan, mainly as a response to rising demand.Increasing labour productivity and production overcapacities continued to influence job creation in 2015. Mechanisation in biofuel feedstock production, for instance, further decreased labour requirements in Brazil.
Similarly, Chinese solar PV and wind manufacturers introduced greater automation. Leftover stocks of PV panels from 2014 exacerbated the job-loss trend. While growth in employment slowed compared to previous years, the total number of jobs in renewable worldwide continued to rise, in stark contrast with depressed labour markets in the broader energy sector. In the United States, for example, renewable energy jobs increased by around 6%, while employment in oil and gas extraction (and support activities) contracted by 18% (Saha and Muro, 2016). In China, renewable energy employed around 3.5 million people, exceeding the 2.6 million employed in the country’s oil and gas sector.
The third edition of Renewable Energy and Jobs –Annual Review discusses the trends in employment and provides the latest update on job numbers, both by technology (Figure 1) and in selected countries (Figure 3).
RENEWABLE ENERGY EMPLOYMENT BY TECHNOLOGY
Further cost decreases in solar PV have been driving deployment both at the utility and distributed levels, enhancing job creation. Globally, solar PV installations in 2015 were 20% larger than in the previous year, with China, Japan, and the United States in the lead. Consequently, solar PV was again the largest renewable energy employer with 2.8 million jobs in 2015, an 11% increase over the previous year.
China was the dominant solar PV employer, with 1.7 million jobs in 2015, due to its undisputed lead in both manufacturing and installations. Japan’s solar PV employment surged 28% to reach 377,100 jobs in 2014, the most recent year available, partly as a consequence of attractive feed-in tariffs (JPEA, 2016). In the United States, high rates of deployment brought job creation to record levels. In contrast, solar PV employment in the European Union (EU) has fallen by 13% in 2014, mainly due to a decrease in manufacturing (EY, 2015). Several Asian countries, other than China and Japan, have also taken promising strides in solar PV employment. India, for instance, emerged as a major market at both large and small-scale. The region witnessed job growth in solar PV manufacturing in Malaysia and the Republic of Korea, and in solar PV installation in Pakistan. While supportive deployment policies had a significant impact on solar PV jobs, trade policies continued to affect manufacturing employment in different countries.
India, for instance, supported its local solar PV manufacturing industry through local content requirements, which should increase employment in the coming years. The United States and the EU have both levied duties on panel imports from China. The Chinese module suppliers have reacted by locating their new facilities in a number of other countries such as Malaysia, Thailand, the Republic of Korea, India, Brazil and the United States. Overall, employment in solar PV manufacturing continued to shift to Asian countries.
Distributed solar PV increasingly offers a promising solution for energy access. Different parts of the value chain (e.g., assembly, distribution, after sales service) can easily be localised to create jobs as illustrated by countries like Bangladesh, India and Kenya. (BOX1)
Employment in liquid biofuels declined by 6% in 2015 to reach 1.7 million. This was mainly due to continued mechanisation in countries such as the United States and Brazil and falling production in others like Indonesia. Jobs increased in the EU, Malaysia and Thailand. With 821,000 jobs, Brazil continues to have the largest liquid biofuel workforce by far. Reductions of about 45,000 jobs in the country’s ethanol industry (due to the ongoing mechanisation of sugarcane harvesting, even as production rose) were only partially offset by job growth in biodiesel. Other important biofuel job markets in Latin America include Colombia and Argentina. Similarly, employment declined in the United States by 2% despite an increase in the production of ethanol and biodiesel. Biofuel employment in the EU increased by 8% in 2014 as production rose. Continued growth in production in 2015 most probably resulted in further job creation.
Indonesia’s palm oil-based biofuel industry grew dramatically since 2006, until exports collapsed in 2015. Biodiesel production dropped by more than half and the utilisation rate of biorefinery capacity fell to 24% (USDAFAS, 2015a). IRENA estimates Indonesia’s biofuel employment in 2015 at 94,800 jobs, down from 223,000 the previous year. Elsewhere in South East Asia, jobs in biofuel continued to increase.
Biofuel employment in Thailand, Malaysia and the Philippines reached 76,900, 31,800 and 9,700 jobs, respectively.
Wind witnessed a record year with strong installations growth in China, the United States and Germany, resulting in 5% increase in global employment, to reach 1.1 million. China leads the way with close to half the jobs. Germany, where offshore wind is also picking up, and the United States are also top players, followed by Brazil and India. China’s position as a leading employer is underlined by the strong showing of Chinese wind companies. Goldwind, for example, now ranks as the world’s largest wind energy company in terms of new capacity commissioned, ahead of Denmark’s Vestas and GE of the United States, the two closest rivals. Five out of the top 10 wind companies in terms of new commissioned capacity in 2015 are Chinese (BNEF, 2016).
Wind employment in the United States rose by 20% to 88,000 jobs, as new capacity additions grew by two-thirds over 2014 (AWEA, 2016). Brazil saw strong gains, with an estimated 41,000 wind jobs in 2015, up 14%. The EU added about 10,000 wind jobs during 2014 (up about 4%).
SOLAR HEATING & COOLING
China kept the lead in solar heating but suffered job losses for the second year running, due to a slowing housing market and the removal of subsidies in 2013. India, Brazil, Turkey and the United States are other major employers. A review of the literature suggests a rough global employment figure of 940,000 jobs. The Chinese solar water heating market accounts for the vast majority (80%) of global installations and employment, but employment fell to 743,000 jobs in 2015. The EU accounts for 6.5% of global installed capacity and 36,000 jobs. Other available estimates include India (75,000 jobs), Brazil (41,000 jobs), and the United States (10,400 jobs). Turkey, an emerging solar heating market, has 90 manufacturers, 700-800 retailers, and more than 3,000 system installers, who all together provide 20,000 direct and indirect jobs. Tunisia, through the PROSOL programme, has generated more than 1,500 jobs in the solar water heating sector.
Estimating small hydropower employment is challenging since certain activities of the supply chain are shared with large hydropower and a significant share of the jobs are informal. IRENA finds that employment in this technology has decreased by 13% to reach 200,000 in 2015. This is largely due to job losses in China, where installed capacity has recently fallen by around 10%. China accounts for half of the estimated jobs in small hydropower, followed by India, Germany and Brazil. Large hydropower employed more than 1.3 million people, with the majority in the operation and maintenance segment of the value chain (Box 2).
There is considerably less information available for other renewable energy technologies, such as biogas, biomass, geothermal and ocean energy, which can potentially lead to an underestimation of global employment. Countrylevel employment information is especially scarce in applications that address the demand for cooking and motive power in rural areas. However, anecdotal evidence from the literature suggests significant potential for job creation (Box 3).
RENEWABLE ENERGY EMPLOYMENT IN SELECTED COUNTRIES
For the second year in a row, the global top-ten in job creation includes four countries in Asia. The continent’s share of total renewable energy employment reached 60% in 2015, up from 51% in 2013. African countries also witnessed an increase, with a conservative estimate of 61,0007 jobs in 2015 as new projects came online. The leading employers are in China, Brazil, the United States, India, Japan and Germany (Figure 3). With more than a third of the global renewable energy capacity additions in 2015, China led employment with 3.5 million jobs, a minor reduction of 2% over previous year. Gains in solar PV and wind were offset by losses in the solar heating and cooling and small hydropower sectors.
Even though annual solar PV installations increased to a record 15 GW (up from 9.5 GW in 2014), employment edged up by just 1%, to 1.65 million jobs. The slow growth can be attributed to: 1) automation in the solar PV manufacturing sector; 2) use of leftover stocks of solar PV panels from 2014; and 3) consolidation of market shares in favour of large suppliers/manufacturers, resulting in economies of scale. Of the total, 1.3 million jobs were in manufacturing, 330,000 in installations, and a comparatively small 22,000 in operations and maintenance. Similarly, wind employment in China grew marginally (1%) to reach 507,000 jobs in 2015.
Despite strong growth in deployment, factors such as overproduction in 2014 and market consolidation played a key role in decelerating growth in jobs (CNREC, 2016). For the second year in a row, employment in the Chinese solar water heating industry fell (by 9%) as sales declined (down 17%) due to a slowdown in the real estate market and removal of subsidies back in 2013. Employment in small hydropower facilities declined by 26,000 jobs, reflecting a reduced pace of new installations.
In Brazil, most renewables employment is found in bioenergy and large hydropower. Jobs in the wind sector are growing, as a result of increasing deployment and local manufacturing. Employment in biofuels declined (by 3%) as jobs in bioethanol dropped by 46,000 due to growing mechanisation. Brazil’s biodiesel production, mainly soybased, rose to a record 3.9 billion litres in 2015. IRENA estimates that biodiesel employment increased by 15% to reach 162,600 jobs in 2015.
Wind industry grew rapidly in 2015 with 2.8 GW of new installations primarily driven by wind energy auctions. In tandem, financing rules to encourage local content resulted in the strengthening of the Brazilian wind equipment manufacturing and service industry. Correspondingly, Brazil’s wind employment increased to 41,000, up from 35,800 in 2014. While jobs in the installation segment remain dominant, manufacturing jobs also increased with the opening of a number of factories along the entire supply chain.
New installations in Brazil’s solar heating market declined by 3% in 2015 due to delays in implementation of the social housing programme Minha Casa Minha Vida as well as an overall reduction in purchasing power and investments. Total employment in 2015 is estimated at about 41,000 jobs, including 30,000 in manufacturing and the rest in installation. To date, Brazil has manufactured and installed PV equipment only on a small-scale.
Employment in solar PV is estimated at 4,000 jobs, but is expected to rise with greater deployment in the future. Indeed, several manufacturers have indicated interest in setting up solar PV manufacturing facilities. Driven by growth in wind and solar, renewable energy employment in the United States increased by 6% in 2015 to reach 769,000 jobs. Solar employment continued its rapid expansion – growing by almost 22% to reach 209,000 in 2015. Jobs in the solar industry grew 12 times as fast as overall job creation in the U.S. economy, and surpassed those in oil and gas extraction (187,200) or coal mining (67,929). Most solar jobs (194,200) are in solar PV, with relatively few in solar heating/ cooling (10,400) and CSP (4,200).
he installation sector accounts for 57% of these jobs, with manufacturing representing less than 15% Almost two thirds of all solar jobs in 2015 were in the residential market, 22% in the utility-scale segment, and 15% in commercial installations. Given the U.S. Congress’ extension of the federal Investment Tax Credit through 2021, continued fast growth is expected. Much of it is likely to occur in the utilityscale market, which is less labour intensive than rooftop (Solar Foundation, 2016). Noteworthy in the U.S. solar market is the growing share of women in the workforce. They accounted for 24% of the total 209,000 jobs, up from 19% in 2013. This is more than in the conventional energy industry, but still well below the 47% share in the economy as a whole. The share of women in the U.S. solar workforce is comparable to Germany and Spain, with 24% and 26%, respectively (see Box 4).
Employment in the United States wind industry registered a 21% gain to reach 88,000 jobs, as annual installations rose by 77% to reach 8.6 GW in 2015. The growth was driven by the Production Tax Credit (PTC) as developers sought to ensure project completion by the end of 2016 – the expected end of the qualification period (BNEF and BCSE, 2016). The subsequent extension of the PTC until January 2020 should ensure continued growth of the wind energy industry in the next 5 years. Manufacturing factories employed 21,000 people; construction, project development and transportation accounted for 38,000 jobs, and operation and maintenance for 29,000 jobs.
Following a high yield of corn crops and falling feedstock prices, ethanol production in the United States rose 3.7% to a record of 56 billion litres in 2015 (Peterka, 2015). Despite the growth in output, ethanol employment declined by 2% to reach 227,600 due to decreasing labour intensity (Urbanchuk, 2016). Meanwhile, biodiesel production (4.8 billion litres) and employment (49,500 jobs) remained virtually unchanged “ doubling the share of renewables in the global energy mix would result in more than 24 million jobs worldwide by 2030 in 2015 from the previous year. In 2014, for the fourth year in a row, member states of the European Union witnessed a decline in renewable energy employment.
As in previous years, economic crises and adverse policy conditions led to reduced investments. The total number of jobs fell by 3% to reach 1.17 million in 2014. The wind industry accounted for most of these jobs, led by Germany, the United Kingdom, Denmark, Sweden, Greece and Austria, while a few other countries saw some progress. The United Kingdom, Germany, and Denmark were the global leaders in offshore wind employment. A third of Denmark’s 30,000 wind jobs, for instance, depend on offshore projects. Employment in the European solar PV industry is now just one third of its 2011 peak, largely due to a reduction in manufacturing. The United Kingdom became the continent’s largest PV installation market (2.6 GW in 2014), and the second-largest employer with 35,000 people. However, cuts in feed-in tariffs for residential rooftop in the United Kingdom could result in a loss of 4,500 to 8,700 solar jobs.
For the biofuels sector, conservative estimates indicate 105,000 jobs across the EU in 2014 (an 8% increase). Employment in the next largest sectors, biogas and geothermal energy (including heat pumps), stayed unchanged. Small hydropower and solar thermal technologies saw small reductions.
Despite a 4% decline in employment in 2014, Germany remains the European country with the highest number of jobs by far – almost as much as France, the United Kingdom, and Italy combined. The decrease in employment mirrors trends in investments in new renewable energy projects – down almost a third from their peak in 2010. The drop in domestic consumption was partly compensated by increasing exports, which support about a quarter of all German renewables jobs. The German wind equipment manufacturing industry, which holds a 20% share of the global market, exported two-thirds of its production in 2015.
Onshore wind registered job gains of about 10% in 2014. Even though job estimates for 2015 are not available yet, Germany installed more new wind capacity last year than in 2014. However, changes from binding expansion targets to annually-variable auctioned quantities in 2016 may introduce uncertainties Germany’s solar PV industry fared poorly, suffering a 38% decline in sales in 2014. Employment decreased by 32%, reaching 38,300 jobs, reflecting the third consecutive decrease in domestic installations and a reduction in manufacturing amid an ongoing shift to Asia. The German CSP sector was marked by insolvencies and companies exiting the market.
France remained the second largest renewable energy employer in the EU, but employment fell by 4%, to reach 170,000 people in 2014. The country lost jobs in solar PV, biomass, geothermal heat pumps and solar thermal. Biofuels, geothermal energy and small hydropower added jobs.
Spain, once a leader in renewable energy, continues to fade, with exports being the only lifeline. Employment in 2014 declined to 76,300 jobs, about half the peak in 2008. Adverse policies in the electricity sector continue to drive the decline in wind, solar and biomass power.
In India, the solar and wind markets have seen substantial activity, as the ambitious renewable energy targets are translated into concrete policy frameworks. Central and state auctions for solar PV, for instance, have resulted in the installation of 1.9 GW in 2015 and an impressive pipeline of 23 GW. Solar PV employs an estimated 103,000 people in grid-connected (31,000 jobs) and off-grid applications (72,000 jobs).
The Indian government’s push for 100 GW of cumulative PV installations by 2022 is generating momentum. With increasing domestic demand, local companies are utilizing their production capabilities and several foreign companies are interested in investing. Irrespective of further developments in manufacturing, reaching the government’s goal of 100 GW PV by 2022 could generate 1.1 million jobs in construction, project commissioning and design, business development, and operations and maintenance. However, meeting skills requirements (30% of these jobs would be highly skilled) requires stepping up training and educational initiatives. The Indian wind energy industry has also had a fruitful year with the installation of more than 2.5 GW. Employment has remained steady at 48,000 jobs.
Japan experienced impressive gains in solar PV in recent years, resulting in a 28% increase in employment in 2014. A strong domestic market in 2015 likely supported further job growth in both construction and manufacturing, especially since 60% of panels were supplied by domestic companies. However, latest policy developments, specifically with feed-in-tariffs, may change the trend. The tariffs were cut twice during 2015, with analysts warning that new installations may decline starting in 2017. Challenges pertaining to grid connection, available land and financing may further limit installations and thus dampen employment prospects.
Several other Asian countries are also showing signs of progress in solar PV. Malaysia was home to 19,000 direct solar PV jobs in 2015. Given the limited number of domestic installations, around 60% of these jobs are in solar PV manufacturing plants that have been set up to cater to foreign markets. The Republic of Korea supports more than 8,200 jobs in solar PV manufacturing and distribution. Pakistan created jobs primarily through small-scale installations in residential and commercial sectors. The solar industry in the country imported and installed an estimated 800 MW of PV modules in 2015, creating jobs for around 20,000 people.
Africa has a significant untapped potential for renewable energy deployment, and has witnessed a number of interesting developments, leading to job creation. In North Africa, Egypt and Morocco are not only deploying wind farms, but also a manufacturing base. In northeastern Egypt, Siemens has announced plans to set up a rotor blade factory in 2017, creating 1,000 jobs. Egypt also has a budding PV sector that currently employs an estimated 3,000 people, but is expected to add many more jobs in 2016. Morocco’s 160 MW Noor I CSP plant started operations in early 2016. It created 1,800 jobs during construction along with 250 permanent operations jobs. For Noor II, AFDB projects 2,000 to 2,500 construction jobs and 400 to 500 operations jobs (AFDB, 2014). Following construction, which employed 700 people, Morocco’s 300 MW Tarfaya wind farm became fully operational in late 2014, with about 50 operations jobs. As part of a winning consortium under a 850 MW government tender, a Siemens factory in Tangier is scheduled to start producing blades for the domestic and export markets in the spring of 2017, with a workforce of up to 700.
In Kenya, wind development is generating jobs in construction, and operation and maintenance. Construction for the 310 MW Lake Turkana wind farm, Sub-Saharan Africa’s largest, began in late 2014, due to be completed in April 2017 (LTWP, 2015) The project may create 2,500 jobs spread over the course of the construction period and up to 200 full time jobs during its operation. Since 2011, South Africa has carried out four bidding rounds under its Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), with a fifth to be unveiled in 2016. Estimates indicate that close to 20,000 jobs have been created in the solar industry alone (Warner, 2014).
As distributed solar PV becomes more affordable, it offers opportunities for alleviating energy poverty, reducing reliance on polluting fuels and creating jobs. Several parts of the solar PV value chain (e.g., distribution, sales, operations, and after sales service) are easy to localize. As discussed earlier in Box 1, a number of companies and initiatives are beginning to scale up in several Sub-Saharan African countries.
THE WAY FORWARD
As the ongoing energy transition accelerates, renewable energy employment will remain strong. While growth is likely to slow down with a maturing industry and rising labour productivity, IRENA’s estimates that doubling the share of renewables in the global energy mix would result in more than 24 million jobs worldwide by 2030. Meeting the increasing labour requirements of the renewable energy sector will require stable and predictable policy frameworks that encourage deployment, stimulate investments in local industries, strengthen firm-level capabilities and promote education and training.