The unstated tradeoff between green and yucky coal jobs

From the RFF Library Blog (Low Carbon Energy: A Roadmap):

New technologies will permit rapid decarbonization of the world energy economy in the next two decades, according to a new report from the Worldwatch Institute. These new energy sources will make it possible to retire hundreds of coal-fired power plants that now provide 40 percent of the world’s power by 2030, eliminating up to one-third of global carbon dioxide emissions while creating millions of new jobs.

Is it just me, or is anyone else wondering what happens to all of the coal-fired power plant jobs? In the U.S., about a few hundred thousand workers are in the coal industry (according to Sourcewatch.org). A 40% reduction of 300,000 is 120,000 lost jobs. Is the clean industry sector so labor-intensive that about 120,000 jobs will be replaced by millions of new jobs (creating a net increase in jobs of millions) in order to supply the same amount of energy?

According to the Worldwatch report's [PDF] Table 4, there are already 406,600 people employed in the renewable energy sector in the U.S. Ignoring the fact that this number includes those in R&D (which will decrease), if 10% of all U.S. energy is renewable, tripling renewable energy production (i.e., replacing 40% of the 50% of coal energy; see Figure 5) to a 30% total might, at most, increase jobs by only 813,000.

That is a back of the envelope calculation, but it makes me wonder where the millions and millions of new jobs are coming from.

Hat tip: Carlos Ferreira

Comments

[Howard]

So is it a good thing or bad thing to take fewer people to generate the same amount of energy?

[odograph]

I'm not too worried, because the altrnative is a policy to preserve coal jobs. Why not preserve tobacco jobs if we are into that kind of thing?

[Mike]

Coal jobs do not need to be “preserved” with government money. They are economically viable. The concept of producing green jobs is to replace economically viable jobs with taxpayer financed jobs, which may or may not produce any power.
Somehow this is called sustainable.

[odograph]

Those coal jobs are only economically viable because they are not paying me for damages to my sushi.

Let's not play a game where we pretend back and forth that this is "only" about jobs, or "only" about externalities.

In this world they (unfortunately perhaps) mesh.

[Env-Policy 101]

I think that the issue here is not so much about multidimensional policy goals or multidimensional policy problems ... but rather it is about advocating for a policy which asserted to have certain impacts. I find it reasonable to question the asserted impacts. Hardly a game. If the impacts are unrealistic yet irrelevant, then it's a strange game to tout them in the first instance. If they're unrealistic and relevant, then it was good to question. It seems, on the face of it, that the "millions" of jobs created relies on some serious nonlinearities (where labor's MP in coal is minimal over the relevant range and labor's MP in renewables is huge?).

Then again, it also seems to me that jobs aren't such a boon. Heck, I require compensation in order to take mine -- where I show up (almost) daily and frown upon those coworkers who intend to "create more work."

[gormk]

"Is the clean industry sector so labor-intensive that about 120,000 jobs will be replaced by millions of new jobs (creating a net increase in jobs of millions) in order to supply the same amount of energy?"

4 things John/Lonewolf/Env-Policy 101:

1) If the US became a world leader in green energy, there could be significant multiplier effects through industries that export technology to the outside world. My guess is that neither currently nor in the future will there there be much demand for US coal production know-how.

2) Building a new industry could also create domestic multiplier effects above the extended impact of coal production. In Norway, about 250K (out of 2.5M employed) people work in oil-related jobs. Out of these, less than 40K are directly involved in oil and gas extraction.

3. Who said anything about millions of jobs created (directly) involved in renewable energy production? Where do you get this from?

4. Your back-of-the-envelope computation still shows a significant net employment effect. In many other posting and treads you have argued (at least John) for something like approximately a 1 to 1 relationship between jobs lost and gained.

gormk

[odograph]

I think that the issue here is not so much about multidimensional policy goals or multidimensional policy problems ... but rather it is about advocating for a policy which asserted to have certain impacts.

Sure, but in the back of our minds we have to think about the alternative to action. If the alternative for me is to eat less and less seafood over my lifetime, I'm going to be kind of pissed.

(The bigger practical issue is probably how to tie national coal reductions to global reductions.)

[Carlos Ferreira]

gormk,

the "millions of jobs" claim is in the link John posted (Low Carbon Energy: a Roadmap). Twice. And it says it'll happen starting now! :)

As for exporting green energy: you mean "green energy" technology, right? Not power, I presume. Tech these days is quickly disassembled and reverse engineered. Copied, I mean. Do you really predict that investment towards creating jobs (not tech, which is by nature capital-intensive, so creates little jobs and tends to displace labour) will make the US a massive energy tech exporter?
I'm curious, John says in his post that investment in R&D will decrease.

[Lonewolf]

Carlos,

John meant to say that "jobs in renewable R&D will decrease over time."

[gormk]

Carlos,

I have not read the link. But the quote clearly does not say "millions of jobs directly involved in green energy production". John's back-of-the-envelope computations seem to be based on the number of individuals who are currently employed directly in renewable energy production and its share of total energy produced.

All I am suggesting is that when one looks at the entire national economic impact, the "millions" claim could be closer to true. But the fact is that neither John nor I (nor you) do rigorous economic analysis on this subject. Even by John's own crude computations above, the claim of the "green job myth" (going back a while) seems exaggerated, as there is clearly an economically significant net employment effect.

Disclaimer: I am not advocating for a green energy fiscal policy. I am an environmental economist who would rather tax the hell out of pollution externalities, which hopefully would have the side effect of inducing the switch in energy technologies. I couldn't care less about employment/unemployment.

Having said that, if one were to entertain the notion of Keynesian-type fiscal policies in these days of economic crisis, which economic sectors are the best targets (aside from the obvious one of education and R&D)?

gormk

[odograph]

I'd be interested in the true ratio of R&D to production jobs. Based on the amount of wind-turbine installation I saw driving through Texas, we are heavily into production mode at this point.

(Why they need to truck empty nacelles both west and east is beyond me.)

[Hydra]

"I am an environmental economist who would rather tax the hell out of pollution externalities"

And you call yourself an economist?

Rather than tax the hell out of pollution externalities shouldn't we tax them ONLY to the extent of their cost?

And shouldn't we tax (or credit) all externalities equally?

We often cite the pollution externality of autos, but transit is heavily subsidized by auto drivers as well. Don't BOTH externalities count? Then, in turn, Auto drivers get SOME congeston relief from transit, so part of the subsidy they provide to transit is justified.

Just because an environmental economy has gartifiying and beneficial aspects is no reason to overpay for them.

If you pay $100 billion to save a hundred lives, that's a good thing, but it is pretty expensive. Especially if you could have saved a hundred different lives for a fraction of the cost, and then used the rest to save other lives.

[Carlos Ferreira]

Lonewolf, odograph:
concerning R&D - I would like some insight on that as well. Maybe R&D jobs will diminish over time, because of the industry maturing? Can't see that happening any time soon, but eventually will.

[Carlos Ferreira]

gormk,
I'm on your boat. Determine clearly the intersect of Marginal Damage with Marginal Abatement Cost, compute the optimal level of pollution and internalize cost by economic instrument - tax, cap-and-trade, you tell me why.
As for millions of green jobs (twice, really...) and energy, the relevant quote is:
"These new energy sources will make it possible to retire hundreds of coal-fired power plants that now provide 40 percent of the world’s power by 2030, eliminating up to one-third of global carbon dioxide emissions while creating millions of new jobs."

[Carlos Ferreira]

Hydra,
lost you on the double (compensating?) externality. Sorry. Care to explain it again?

[Hydra]

Not sure I understand the question.

Take transit for example. Transit riders are not paying the full cost of paying for their transportation system. Nor should they, necessarily. The system provides at least some relief from congestion for auto users, and so auto drivers should expect to subsidise transit to the extent they get relief.

Some claim that transit allows for more dense, more efficient development, therefore it is correct that landowners also subsidize transit (to the benefit of transit riders). (They also claim that dense development allows lower taxes for others in the jurisdicition, thereby implying that landowners near transit may be paying too much.)

But all we usually hear is that autos are not paying their full externalized costs, of which we point to pollution, congestion, accidents, road construction and maintenance, etc. etc. We don't hear that the load factor for autos is hardly different than the load factor for transit. Even during rush hour trains go in full and come back empty: peak load factor start out near 50%, and goes down from there.

We don't hear that auto drivers provide their own capital, equpment, mainteneance, insurance, and labor.

We hear that building more roads leads to induced traffic, and therefore you cannot build your way out of congetion. We don't hear that roads are also used for freight and emergency services.

But, every transit rider who gets off the road induces the same amount of traffic. Whether you free up a road space by oe kind of construction or another, that space is now available for the next user with utility factor. In DC, METRO is the regions largest provider of parking spaces. so in fact METRO would not function without auts to feed it.

So, my point is that there are both positive and negative externalities and BOTH need to be counted. Sometimes thay are countervailing externalities, and they may amount to a wash.

But, rather than argue over one technology or another, whether it is transit vs cars, coal vs renewables, we should be looking for the true best, least cost, mix of technologies.

As you say:

"Determine clearly the intersect of Marginal Damage with Marginal Abatement Cost...." and while you are at it, determine clearly the marginal positive externalities, and let those who enjoy them pay for them, because the concept of "polluter pays" is incomplete.

[Michael Roberts]

Uhm, a couple things:

1) 800,000 jobs is a lot.
2) Multiplier effects? Multiply 800K by 1.5 to 2. Maybe more, depending on the kind of jobs.
3) A lot of this is supposed to be infrastructure development, I think, like a good, heavily redundant power grid over the whole country. This would facilitate trade from areas where renewable energy is cheap to areas where it is expensive. Now seems to be a good time for heavy public spending on public-good infrastructure.
4) And I'm not even counting the price of pollution.

[John Whitehead]

Michael,

1) 800,000 is less than millions and millions
2) the multiplier I use is closer to 1.
3) Nice point.
4) Nice point.

The point of the post is #1. I rarely lose sight of the fact that these negative externalities should be corrected because the benefits of correction exceeds the costs. Yet, overblown claims of employment impacts deserve attention.