Job shifting effects of carbon pricing policy, with a focus on the Canadian construction industry

Construction and Carbon: The Impact of Climate Policy on Building in Canada in 2025  is a report released on May 1 by the Smart Prosperity Institute, with a title that doesn’t reflect the full range of the study.  The report actually models the effect of carbon pricing on GDP and employment in six sectors, although construction is the focal point since the research was financed by the Canadian Building Trades Unions.  Author Mike Moffatt uses the general equilibrium model gTech  to project two scenarios for the medium term (2025) :  a “business as usual” case (which assumes federal and provincial carbon policies as they existed in 2018) and an “aggressive” case, which assumes carbon prices increasing over time so that Canada would achieve its  Paris Agreement commitment to reduce  greenhouse gas emissions  by 30% by 2030.

Smart Prosperity emphasizes that “the construction sector is one of the ‘winners’ of carbon pricing, as escalating carbon prices unleash a wave of business and household investment.”  Specifically, raising the stringency of carbon prices (the aggressive scenario) shows that the total number of jobs in Canada would  increase by an 39,500 – 19,000 of which would be in construction, and 55,000 of which would be in services. These gains are offset by job losses in the other sectors: utilities, resources, manufacturing, and transportation. smart prosperity map re construction reportProjections are broken down by province: showing that for construction jobs, Saskatchewan would see the greatest growth, followed by Quebec, Ontario, New Brunswick, Alberta, and British Columbia.

The report also provides forecasts for: Investment by sector; Impact of Higher Carbon Policies on Business Investment by Type (e.g. renewable energy, CCS, public transit); and  Impact of Higher Carbon Policies on Household Investment by Type (building efficiency, low-carbon vehicles).

The differentiated effect of carbon taxes by sector is a theme explored in an earlier Smart Prosperity working paper  Do Carbon Taxes Kill Jobs? Firm-Level Evidence from British Columbia , released in March 2019 as part of the Clean Economy Working Paper series.  The Smart Prosperity Institute is based at  the University of Ottawa.

Just Transition guidebook includes case studies, methods of measuring employment impacts

real-people-change-Called both a strategy document and a guidebook, Real People Real Change: Strategies for Just Energy Transitions  was officially launched at the Berlin Energy Transition Dialogue event on April 10, although published by The  International Institute for Sustainable Development (IISD)  in December 2018.  The IISD  says “it is intended to support governments of both developed and developing countries in their efforts to make energy transitions just. It brings together political and communications strategies for a just transition, building on research and case studies of energy transitions that have happened or that are happening in Canada, Egypt, Indonesia, India, Poland and Ukraine.”  The report highlights what it calls  “a common “4C” framework that has been critical to several successful transitions: understanding the local context; identifying champions that can drive transition with various groups; making the case through transparent and effective stakeholder engagement; and developing complementary policies that support those who will be directly impacted by transition.

The report also includes Annex 1: Quantitative approaches for estimating
employment impacts, which provides a brief overview and critical analysis of the unique challenges of measuring the transition pathway through its stages.

The 5th Berlin Energy Transition Dialogue (BETD) included a side event,  Shifting to Below 2°C Economies: Strategies for just energy transitions, summarized here.  Amongst the speakers:  Hassan Yusseff, President of the Canadian Labour Congress, and Samantha Smith, Director of the Just Transition Centre.

New modelling forecasts 46 million jobs by 2050 in a 100% renewable energy scenario

achieving paris goals teske coverA newly-released book, Achieving the Paris Climate Agreement Goals, provides detailed discussion of the the implications, including job implications,  of a transition to 100% renewable energy.  The  book’s findings are summarized by Sven Teske of the Institute for Sustainable Futures, University of Technology Sydney, in “Here’s how a 100% renewable energy future can create jobs and even save the gas industry”,  which appeared in The Conversation (Jan. 23). That article states: “The world can limit global warming to 1.5℃ and move to 100% renewable energy while still preserving a role for the gas industry, and without relying on technological fixes such as carbon capture and storage, according to our new analysis.” The scenario is built on complex modelling – The One Earth Climate Model  – and foresees a gradual transition from gas to hydrogen energy, so that “by 2050 there would be 46.3 million jobs in the global energy sector – 16.4 million more than under existing forecasts….  Our analysis also investigated the specific occupations that will be required for a renewables-based energy industry. The global number of jobs would increase across all of these occupations between 2015 and 2025, with the exception of metal trades which would decline by 2%. ”

The article summarizes a book with a daunting title:  Achieving the Paris Climate Agreement Goals: Global and Regional 100% Renewable Energy Scenarios with Non-energy GHG Pathways for +1.5°C and +2°C . It is the culmination of a two-year scientific collaboration with 17 scientists at the University of Technology Sydney (UTS), two institutes at the German Aerospace Center (DLR), and the University of Melbourne’s Climate & Energy College, with funding provided by the Leonard DiCaprio Foundation and the German Greenpeace Foundation.   It was published in January 2019 by Springer as an Open Access book , meaning it is free to download the entire book or individual chapters without violating copyright.  Of special interest:  Chapter 9,  Trajectories for a Just Transition of the Fossil Fuel Industry , which provides historical production data for coal, oil and gas production, discusses phase-out pathways for each, and concludes with a discussion of the need “to shift the current political debate about coal, oil and gas which is focused on security of supply and price security towards an open debate about an orderly withdrawal from coal, oil and gas extraction industries.”

The data presented in Chapter 9 form the foundation of Chapter 10,  Just Transition: Employment Projections for the 2.0 °C and 1.5 °C Scenarios . This consists of quantitative analysis, ( the overall number of jobs in renewable and fossil fuel industries) and occupational analysis – which looks into specific job categories required for the solar and wind sector, and the oil, gas, and coal industry. The chapter provides projections for jobs in construction, manufacturing, operations and maintenance (O&M), and fuel and heat supply across 12 technologies and 10 world regions. The conclusion:  “Under both the 1.5 °C and 2.0 °C Scenarios, the renewable energy transition is projected to increase employment. Importantly, this analysis has reviewed the locations and types of occupations and found that the jobs created in wind and solar PV alone are enough to replace the jobs lost in the fossil fuel industry across all occupation types. Further research is required to identify the training needs and supportive policies needed to ensure a just transition for all employment groups.”

German unions call for mass retraining to support the electrification of vehicle manufacturing by 2030

IGMetall logoOn June 7, the European unions IG Metall and IndustriAll Europe  released a report which models the employment impacts of the possible fuel efficiency standards required to further decarbonize the European automotive industry.  The report, whose title translates as  Effects of vehicle electrification on employment in Germany,   presents three scenarios: the first, close to existing regulations, will require a 2030 automotive fleet consisting of  15% plug-in hybrids and 25% battery-electric vehicles, and is forecast to result in an 11% loss of employment by 2030, or 67,000 jobs.  The second and third scenarios predict even more job loss –  108,000 or 210,000 across Europe.

In a press release announcing the study, the automotive advisor of IG Metall and chairman of the automotive committee of IndustriAll Europe says:  “We fully support the evolution towards a new automotive paradigm, but this has to happen in a socially acceptable way. …. It will require the combination of industrial and employment strategies. Mass training programmes will be needed while ambitious reconversion plans should avoid the decline of regions…. In this respect we should not forget that many regions all over Europe are heavily integrated in the automotive supply chains. Equally, we should not forget that thousands of SMEs producing conventional components are at risk as they miss the necessary financial resources, the research capacity and the technologies to invest in alternative products. Also, the aftermarket and its 4m jobs will be severely disrupted as electric vehicles require much less maintenance”.

The report is not available in English, but is summarized in the press releases by IndustriAll  and  by IG Metal  (in German, use the “translate” feature) .  It was initiated by IG Metall,  along with car manufacturers BMW, Volkswagen and Daimler, automotive suppliers Robert Bosch, ZF Friedrichshafen, Schaeffler, and Mahle and the German Association of the Automotive Industry.  Research was conducted by the Fraunhofer Institute for Ergonomics and Organization (IAO) in Stuttgart , using  data from the companies involved.

Industriall logoIn March 2018, IndustriAll  announced that it was one of the stakeholders in a newly-approved EU  Blueprint for Sectoral Cooperation on Skills in the automotive industry (part of the New Skills Agenda for Europe).  The March press release   characterized the automotive sector as “in turmoil because of so many structural changes taking place at the same time: the ever stricter emission standards and the resulting quest for alternative powertrains, the digitalisation of production processes, automated driving, the increasing connectivity of cars with the outside world, development of mobility as a service.”

 

Energy efficiency programs can create 118,000 jobs per year in Canada, says new report

Less is more jobs map_20180501_TMA new report from a new organization:  on May 3, Clean Energy Canada announced that it had partnered with a new national policy organization, Efficiency Canada, to  publish a study of the economic impacts of energy efficiency for Canada.  The report’s title tells the story:   Less is More: A win for the economy, jobs, consumers, and our climate: energy efficiency is Canada’s unsung hero  .

There are two scenarios reported: The first, modelling energy efficiency programs in the Pan-Canadian Framework (“PCF”) , estimates that every $1 spent on energy efficiency programs generates $7 of GDP,  and an average of 118,000 jobs per year will be created between 2017 and 2030.  Jobs would be spread across the country and the economy, with about half of new jobs produced in  the construction, trade and manufacturing sectors, peaking in 2027 and 2028.  The  overall economic impact is largely driven by energy cost savings – for  consumers,  $1.4 billion per year (which  translates into $114 per year per household).  For business, industry and institutions, the savings are estimated at  $3.2 billion each year.  Importantly, the PCF energy efficiency programs could  reduce greenhouse gas (GHG) emissions by approximately 52 Mt by 2030, or 25% of Canada’s Paris commitments.

For the second, more ambitious policy scenario, “PCF+”, the net increase in GDP grows to $595 billion, employment gains are  over 2,443,500 job-years in total from 2017 to 2030, and  greenhouse gas emissions are reduced by 79 Mt, or 39% of Canada’s Paris commitment.

Less is More is only 8 pages long.  The detailed results, as well as explanation of the modelling assumptions, are found in the Technical Report ,  produced by Dunsky Energy Consulting of Montreal, commissioned by Clean Energy Canada and Efficiency Canada.  The technical report  modelled the net economic impacts of energy efficiency measures related to  homes, buildings and industry (not included: the transportation sector, nor  electrification and fuel switching in the building sector). Modelling was done for two scenarios: implementation of programs in  the Pan-Canadian Framework on Clean Growth and Climate Change (PCF), and a PCF+ scenario, which includes all the PCF programs plus  “best in class” efficiency efforts , derived from exemplary programs across North America.

Efficiency Canada , the national policy organization launched on May 3, is  based at Carleton University in Ottawa and is the new incarnation of the Canadian Energy Efficiency Alliance.  From the new website: “Efficiency Canada advocates to make our country a global leader in energy efficiency. We convene people from across Canada’s economy to work together to advance policies required to take full advantage of energy efficiency. And we communicate the best research out there to build a more productive economy, sustainable environment, and socially just Canada.”   To read their full story, go to their webpage, Who is Efficiency Canada ?