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DIW says net impact of renewables is positive

Job creation

The German Institute of Economic Research released a study this week on net – not gross – job creation in the renewables sector based on the German case and found that more jobs are created than lost.

 - The DIW has produced a sound economic review of the net effect of investments in renewable's on economic growth and the job market. Source: DIW
The DIW has produced a sound economic review of the net effect of investments in renewable's on economic growth and the job market. Source: DIW

Often, the renewables sector likes to point out how many jobs have been created in the sector as a justification for investments in the industry. Critics of renewables and libertarians (who oppose government intervention in the market in principle) then charge that the net effect is quite different and may in fact be negative (see this review from a few years ago as a PDF).

The question in all of these cases is how exactly to count what. Now, Germany's Institute of Economic Research (DIW) has applied the Sectoral Energy-Economic Econometric Model (SEEEM) to Germany – and found that the net job creation effect is positive. One reason is that, as the study argues, investments in renewables largely offset energy imports; in the case of Germany, oil, natural gas, and hard coal in particular. Likewise, investments in such new technologies facilitate innovation, creating "competitive advantages on international markets" which "several studies failed to include," as the DIW points out.

DIW investigates two scenarios from 2000 to 2030, one in which renewable energy expands and the other in which it doesn't. By 2030, the DIW calculates that Germany will be exporting some 30 billion euros in renewable technology, by which time its domestic consumption of renewables will be offsetting almost 27 billion euros in "fossil fuel imports" (keep in mind that Germany will no longer have nuclear power by then; uranium is also largely imported to Germany).

On the job market, the DIW estimates that investments in renewables had created 22,000 net jobs in 2010. The forecast is, however, is not optimistic for the next two decades, for total net job creation is to "decline over time, but still remain positive." Economic growth is expected to continue to rise, outstripping new employment opportunities – a situation that economists call "increased productivity."

The forecast for economic growth is particularly interesting because it shows that the impact of the cost of renewable energy will not slow down economic growth. On the contrary, the DIW estimates that GDP will be 1.0 to 2.9% greater by 2030 in the renewables-expansion scenario than in the scenario without renewables growth.

The study is available in English as a PDF from the DIW website. (Craig Morris)

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