Renewable Energy and Energy Efficiency

Renewable Energy and Energy Efficiency: Economic Drivers for the 21st Century

A new report from the American Solar Energy Society shows that as many as 1 out of 4 workers in the U.S. will be working in the renewable energy (RE) or energy efficiency (EE) industries by 2030. The report shows that these industries already generate 8.5 million jobs in the U.S., and with appropriate public policy, could grow to as many as 40 million jobs by 2030.

The 40 million jobs that could be created in renewable energy and energy efficiency by 2030 are not just engineering-related, but also include millions of new jobs in manufacturing, construction, accounting, and management.

Renewable energy and energy efficiency industries today generate nearly $1 trillion in revenue in the U.S. contributing more than $150 billion in tax revenue at the federal, state, and local levels, according to the report.

The report notes that renewable energy and energy efficiency (RE&EE) technologies and programs have been around for decades and are well understood. But our understanding of the economic and jobs impacts of RE&EE technologies and initiatives has been less well understood.

For one thing, there are no consistent definitions of either the RE or the EE industry. In addition, there are no aggregated industry data, because the analyses and forecasts usually deal only with a specific sub-element of the RE&EE industry (wind, photovoltaic or PV, vehicle fuel efficiency, etc.).

The report’s authors found that virtually all of the studies reviewed used different assumptions, scenarios, base years, forecast time horizons, and other parameters, making it difficult or impossible to compare one to another. And many of the forecasts take the form of “If we spend $X billion on technology Y over the next … years, then Z will be the result.” Because all of the important variables differ significantly among the forecasts, in the aggregate they are less useful than they might be.

To remedy these deficiencies the authors first developed working definitions of the RE&EE industry, then established a baseline of 2006 data describing its size and scope so that analysts could make forecasts meaningful and easy to compare. Finally, they forecast the growth of the RE&EE industry in the US to 2030 under three different scenarios.

In terms of definition, the authors concluded the RE&EE industry encompasses all aspects of renewable energy and energy efficiency, and includes both the direct and indirect jobs created in both these sectors.

In terms of size and scope study defines renewable energy technologies primarily as hydroelectricity, biomass, geothermal, wind, photovoltaics, and solar thermal. Except for hydro and industry biomass, the RE U.S. energy contribution is small, although it is growing rapidly.

RE gross revenues totaled nearly $40 billion in 2006, and the RE industry was responsible for more than 450,000 direct and indirect jobs. The jobs created were disproportionately for scientific, technical, professional, and skilled workers, and more than 90 percent of the jobs were in private industry.

While the RE industry is fairly well defined and consists of distinct sectors, the EE “industry” is much more nebulous and difficult to define. Most EE spending is included in partial segments of large industries, such as vehicles, buildings, lighting, appliances, etc.

The authors included insulation sales, energy service companies sales, and the U.S. recycling and reuse industry sales. For other industries, they included only the portion of their sales that related to EE.

In 2006 the combined RE&EE industry generated nearly a trillion dollars in industry sales, 8.5 million new jobs, more than $100 billion in industry profits, and more than $150 billion in increased federal, state, and local government tax revenues.

In addition, RE&EE reduce the risks associated with fuel price volatility and can facilitate an industrial boom, create millions of jobs, foster new technology, revitalize the manufacturing sector, enhance economic growth, and help reduce the trade and budget deficits.

The third objective of the research was to forecast the growth of the RE&EE industry to 2030. To accomplish this, three forecast scenarios were used —a base case, a moderate scenario, and an advanced scenario.

The base case is essentially a “business as usual” scenario, which assumes no change in policy and no major RE&EE initiatives over next 23 years. The base case clearly indicates that without substantial change in policy, renewable energy is unlikely to significantly increase its share of the U.S. energy market.

The moderate scenario assumes that various moderate, incremental federal and state RE&EE initiatives are put in place during next two decades. This scenario incorporates modest initiatives, and assumes a continuation of the positive policies that are in place, with market conditions favorable to renewables. In this scenario about 15 percent of electricity generation is attributable to RE and similar growth is forecast for deployment of EE technologies.

The advanced scenario “pushes the envelope.” It indicates what is possible using current or impending technologies and includes what may be realistically feasible both economically and technologically in such a scenario. In this scenario, nearly thirty percent of our electricity is generated from renewable sources and they estimated similar growth in EE.

Achieving success in any scenario in any scenario is subject to significant uncertainties in key market drivers, including volatility in oil and gas prices, the pace and scale of action on climate change, the extent of technology breakthroughs, and federal and state government RE policies and incentives. However, public policy and future energy prices are likely to be the major determinants of future market share for RE.

Under all scenarios RE growth is much larger than EE growth, but the economic and job impact of Endless Energy remains orders of magnitude larger than RE. The study estimates that RE and EE revenues in 2006 dollars in 2030 could be as high as $4.5 billion with jobs as high as 40 million (both based on the assumptions of the advanced scenario). This is a well documented and illustrated report, and although it relates solely to the US market, it has some telling observations that are applicable in other economies. It is worth the read.

Source: American Solar Energy Society .

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