Full Title: Employment Estimates in the Energy Sector: Concepts, Methods, and Results
Author(s): David Solan and Chris Juchau
Publisher(s): Energy Policy Institute and Center for Advanced Energy Studies
Publication Date: 03/2013
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A large body of literature exists regarding the estimation of the number of jobs that can be created by energy related projects and policies. The majority of studies are reports from universities, national laboratories, and consulting entities. There appear to be few peer-reviewed journal publications, and there are substantially more estimates related to renewable energy sources than there are for fossil fuel and nuclear technologies. There are also few projections based on energy efficiency. Estimates from one study are often used to produce estimates in another study, and there seems to be a relative absence of studies that estimate the employment effects of different generation technologies in terms of both constant cost and constant effective output.
Employment estimates in the energy sector tend to vary widely even within a given generation technology due to differences in assumptions and data reporting methods. This is true even when similar estimation methods and identical models are used. Studies that report direct, indirect, and induced job creation show that the indirect and induced jobs created by a given project often outnumber the creation of direct jobs. In addition to determining the number of job openings that may be created by a project or policy, examining the types of positions that will be created and the
occupational characteristics of the unemployed labor force can be important. Creating numerous opportunities via government spending when there is a low rate of unemployment or an absent skill set may result in job displacement and wage inflation. Or, job openings may remain unfilled if there is not an adequately trained workforce available during a temporary stimulus or short-term program. Estimates of increases in employment can usually be considered upper bounds on actual increases because most studies do not account for constraints on worker availability, potential job destruction, and double counting of jobs that may have been created under business as usual conditions. Very few
validation or ex post studies have been done for comparison, and those that have been completed are not project specific.
An important theme that has resulted from this literature review is the broader conclusion by several authors that employment should not be used in isolation when making energy sector investment decisions. Employment estimates in the energy sector need to be tailored for specific projects or policies and should be used as only one metric of more extensive cost-benefit and economic impact analyses. Without consideration of other factors such as cost to consumers and businesses, global economic competitiveness, natural resource management, system reliability, and environmental impact, the estimated number of jobs that can be created by any energy related project or policy would seem to have limited utility for sound long-term decision making.