Renewable Energy Employment:Uncertainties in the “Boosting Effcet”

China currently has high rates of employment in the conventional energy sector. If the country is to reduce the proportion of coal consumption in a relatively short period of time, the decrease in employment of the entire energy sector will be inevitable, even with the expansion of employment incrementally brought about by renewable energy development. However, policy makers still need to consider policy options to promote the growth rate of employment in the energy transition period and be aware in advance of the problems that might occur during this process.

After comparing and analyzing recent reports and data on employment issues in the Chinese renewable energy industry, we think that renewable energy’s boosting effect on employment might face two main challenges between 2020-2030. Firstly, as the growth rate of employment in traditional energy sector declines, this will offset the boosting effect of renewable energy on employment. Secondly, the solar photovoltaic (PV) industry, which currently leads the increase of employment, is likely to confront the problem of a weaker employment rate. The first problem is mainly due to a historical burden. The historical burden refers to the long dominance of coal in China’s energy system, and it is expected that in the next 10-15 years, the share of coal consumption will dramatically decline. Regarding the second problem, whether the solar PV industry can keep boosting employment or not depends on the installed capacity target and supporting policy on solar power generation in China.

 

Renewable energy and traditional energy sector: finding a balance between “boosting effect” and “crowding-out effect” in employment issues

Several scenario simulation studies have indicated that, for the overall employment situation in the energy sector, the “boosting effect” in the renewable energy sector will surpass the “crowding-out effect” in the traditional energy sector. In the long term, the total volume of employment in the energy industry as a whole will not decline but instead increase to a certain degree. Nevertheless, in the process of energy transformation, employment rates may stagnate temporarily or even decrease in some specific sectors during a certain period. Specifically, the reduction of employment in the traditional energy sector will surpass the increase of employment in the renewable energy sector. Thus the net volume of employment of entire energy sector will decline.

Based on the existing research on the employment impacts of renewables development, we estimate that there will be a turning point for employment in China’s energy industry in 2030. This means that the development of renewable energy will need to reach a certain size to offset the job losses in traditional energy sector, and then accelerate the employment growth rate of the entire energy industry.

 

Solar PV: the leading role in boosting employment in renewable energy will be weakened

The current amount of employment in renewable energy sector in China accounts for more than 40% of those in the world. The solar PV industry provides the most jobs, equivalent to nearly half of the total amount of employment in the Chinese renewable energy sector. In 2014, employment reached 1.6 million, a 4% year-on-year increase, which is not only due to the increased demand of solar PV in the world, but also due to the dramatic growth in domestic installed capacity. The high proportion of employment in the solar industry in China is closely related to solar resource availability and manufacturing-oriented features. Especially in recent years, due to the domestic subsidies, low costs, market accessibility and other advantages, the global solar PV technology industry has shifted from Europe and America to China, resulting in a significant increase in employment in this sector.

However, if we examine the job generation amount according to the number of jobs per megawatt (MW), this ratio was close to 60 jobs per MW in China’s solar PV sector in 2014, approximately 4 times that of the world average level. In the long run, job creation potential from China’s solar PV industry will decline, owing to increasing technological competition, alleviation of industrial overcapacity, improving productivity and the potential for industry transfer to other countries. If the year of 2020 is a tipping point, then the decrease in growth rate of employment will coincide with the decrease in net employment of the entire energy sector in 2020-2030.

Comparison of renewable energy industry’s employment capacity in China and other countries

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Adapted from REN21’s Renewables Global Status Report (2015). The solar energy in the chart includes solar PV, solar heating and solar thermal power

 

Author:Zhao Ang  and Lin Jiaqiao

Categories: Blog, Uncategorized

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