sectoral economic costs and benefits of ghg mitigation - IPCC

Fossil Fuels
Climate Policy and Job Impacts: Recent Assessments and the
Case of Coal 1
Seth Dunn and Michael Renner
1 Introduction
Several recent climate policy assessments conducted in the United States and Europe suggest that
net employment increases can be achieved through full-cost energy pricing, an accelerated
uptake of energy-efficient and renewable technologies, and greater use of alternative
transportation modes. While some of these jobs arise from re-spending efficiency savings on
more labor-intensive services in non-energy sectors, renewable energy has considerable direct
job-creating potential, some of which is beginning to be realized in parts of Europe and the
United States. The possible benefits for developing countries are especially significant, both for
avoiding burdensome financial expenses on fossil fuel imports and for creating new sources of
employment.
Even in the absence of climate policies, employment in fossil fuel energy industries is declining
and will continue to do so due to consolidation and other cost-cutting practices: coal miners, for
example, account for less than one-third of 1 percent of the global workforce. A major challenge
facing governments seeking to ease this transition will be to facilitate the location of “sunrise”
industries—such as natural gas, wind turbines, and solar photovoltaics—in communities affected
by the decline of “sunset” industries like coal and oil. In addition, the use of energy and/or
carbon tax revenues to reduce payroll taxes and the targeted redirection of fossil fuel subsidies
toward job retraining programs and retirement packages could lessen the resistance of workers in
these industries to proactive climate policies.
2 The Changing Environment of Work
As has been the case with past environmental policies, the potential employment impact of
climate change mitigation has been subject to considerable debate. Even with growing public
concern over climate change, this debate risks polarization as the rise of the information
economy and trends toward economic globalization spawn concerns about job security, skills
obsolescence, and wage trends. In Europe, for example, more than 10 percent of all jobs vanish
each year, replaced by different jobs; in Germany in 1995, 30 percent of employees were in
“insecure” jobs. Unemployment rates have been rising in advanced industrial nations since 1970,
have risen rapidly in the Former Eastern Bloc nations since the end of the Cold War, and are
becoming problematic in many regions of the developing world. (See Table 1.)
Traditionally, industrial nations have sought to economize on labor in an environment of
resource abundance. The current situation of growing labor abundance and carbon constraint,
however, argues for economizing on energy through improved productivity. There is substantial
scope for enhancing energy productivity, which in the U.S. in the mid-1990s was only marginally
higher than in 1950. (See Figure 1.)
1
This paper is adapted from S. Dunn, “King Coal’s Weakening Grip on Power,” and M. Renner,
“Creating Jobs, Preserving the Environment.” See references for further detail.
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