Energy efficiency initiatives create jobs, and normally very good jobs. Recent analysis shows that between 17 and 19 net jobs can be created for every million euros spent. That is a million euros from all sources. And since the analysis shows that energy efficiency activities are more labour-intensive than manufacturing, decision-makers should pay close attention. The leverage of public and private funding is often five to one and some even estimate ten to one, meaning 1 million euros of public money can lead to investments of between five and ten million euros. That means between 85 to 190 jobs for 1 million euros of public money. By comparison, the renewable energy industry in Europe creates an estimated nine jobs per million euros.
Jobs can be created relatively quickly if extra funding is provided to existing programmes or funding facilities. For example, the KfW bank in Germany, one of the global leaders in funding energy efficiency projects, has the kind of infrastructure and pipeline that would make it feasible to put an extra €100 million to use quickly. In other cases, new programmes would have to be developed before the public could benefit from extra funding.
The start-up process could take a considerable amount of time before financing could be made available for new programmes such as the Green Deal in the UK or the Energy Efficiency Obligations (EEOs) that are being discussed as part of the draft Energy Efficiency Directive, which has experience only in in a few Member States. The Green Deal is expected to become operational later this year after a development phase that has taken a couple of years. That is a normal developmental time, based on the ramp-up time of countries that have energy efficiency obligations. But the development phase means a delay in realising fundable projects and the jobs they bring with them.
In the context of the Energy Efficiency Directive, there will be an implementation “experiment” in about 20 member states for the EEO because they have no experience in that area. Ramping-up will probably be slow but once these energy efficiency obligations are fully operational, job creation could be quite significant.
Furthermore, a proposal for deep renovation on 3% of public buildings above 250 m2 every year would almost certainly have a slow rate of implementation at the beginning, but would produce good efficiency when up and running. Doing a deep renovation on such buildings will require complex analysis to determine the optimal measures to install. That will require architects and designers to work together with equipment providers, financiers and the like. That will not happen quickly, unless the planning for those projects has already taken place. And a deep renovation takes more care than a normal renovation. The building constitutes an entire system, with all elements installed to the highest standard. That means that workers will most likely require training, especially if a 3% target is to be achieved.
Care has to be taken not to over-estimate what can be accomplished in the short term. The future is clearly positive but only if all the right pieces are put in place. Poor results could hurt the credibility for a generation. For maximum impact of an Energy Efficiency Directive there must be a parallel jobs strategy to ensure a comprehensive approach to implementation.
Jobs to improve energy efficiency in all end-use sectors are of high value. Many require technical qualifications, such as engineering or architectural degrees. Many require re-training from existing jobs. There will be a demand for financial specialists, construction engineers, behaviour specialists, project managers, auditors, data base managers, policy analysts and the like. And these jobs are available to all, regardless of age or gender.
The hard work of creating these jobs begins once the Directive is finally approved. The long-term policy framework needs to be in place and the funding and implementation strategy need to be well developed. But in the longer term, opportunity is knocking at the door, and it deserves a welcome mat.
Energy in Demand - Sustainable Energy - Rod Janssen 
Do you have references for the statement “Recent analysis shows that between 17 and 19 net jobs can be created for every million euros spent.”?
I remember that CEU came up with <10 to 30 jobs net in their Hungary study.
Thanks,
Anke
The 17 net jobs comes from the latest “Europe’s Buildings Under the Microscope” published by the Buildings Performance Institute Europe (www.bpie.eu). The 19 jobs is a special case for the deep retrofit of public buildings as could be required under the proposed Energy Efficiency Directive that is currently in the approval process. Any more queries on it should be directed to the contact email address available on this site.
Hi both, it is true that CEU identified a potential of 10-30 jobs per mil USD, but wasn’t about Hungary, it was a summary of a market screening and mainly on USA.
Myself ellaborated a study as part of a EU Comm contract (unfortunately never published entirely, but only in brief) on estimating the benefits of renovating the EU residential sector. On top of what Diana and CEU identified in their study, I used the job creation potential of the EU construction industry and for 2007 resulted around 38000 euro/employee, or 26 jobs at 1 mil euro if is used the apparent labour productivity (added value on no employees) and around 8,8 jobs at 1 mil Euro is you report the turnover at the no of employees. The last is more realistic in my opinion because seems to reflect better the job creation potential. Most probably the trouth is in between. But these are the direct jobs and there are some others in the supply chain industry. Moreover, the EU average is not relevant for all the MSs, the labour productivity differ largely and it is much higher in some CEE countries. We should also consider the engative impact in the energy sector due to a potential decrease of energy consumption, but this is much lower.
In the BPIE study we use a kind of conservative approach and that’s the reason of the 17 employees per 1 mil euro.
Anyway, the most credible evaluations used by CEU in their analysis were below 20 jobs/mil invested. Moreover, if I am not wrong, the CEU study didn’t use the net present value but the actual values without applying discount rates.
Generally, at macro-economic level, the job creation potential depends largely on the way is financed the activity. If you take public money from another activity to put in en eff, means we should deduct the negative impact there. It is also a question of how much private money are leveraged by a given public investment and by the associated economic instrument. I think 1 to 3 is the most conservative ratio of this, but depends largely on the scheme.
Finally, there are no doubts that en eff in buildings has a huge potential to support employment in the contruction sector, one of the most affected by the actual crisis. It is important to do it, to put the money but moreover, to know how to implement the most appropiate scheme, tailored on the country needs, tradition and behavior.
Dear Bogdan, You raise some very important points. The BPIE built on the initial work done by the CEU. Yes, the BPIE took a conservative point of view and that is important politically. But these are pretty consistent with some analysis from the US. The range of numbers bandied about reflect the fact that different studies make different assumptions, and most don’t tell you their methodology, nor whether it’s gross/net/direct/indirect/induced/saved jobs.
What I think would be more fruitful would be to get the Commission to reveal its assumptions and methodology for assessing job creation, or if that doesn’t exist, a Commission a piece of work to develop a consensus methodology. This is becoming more and more important and the numbers are creating more confusion than clarity. This has particularly been true as the Energy Efficiency Directive has been going through the approval process in the European Parliament.
The story has not ended. Hopefully we’ll get more rigour – and soon.
Dear Rod,
I agree your ideas, not all the methodologies are consistent and/or fully transparent. As you said, it is also important to agreggate the analysis on the same basis and to be sure you’re not comparing apples with pears.
However, some of them are clearly described and I’d been seen some American studies with a quite well description of the methodology. Most probably I downloaded them somewhere on my artificial memories.
Moreover, for instance ACEEE developed a job calculator for estimating the job impact of the ARRA. Please find it here: http://www.aceee.org/press/2009/07/aceee-releases-job-calculator-energy-saving-stimulus-pro
It is worth playing a little with it, not rocket science but pragmatic and can be improved and adapted to other countries’ realities.