Does climate action destroy jobs? An assessment of the employment implications of the 2‐degree goal

• Author: Moana SIMAS,Kirsten S. WIEBE,Marek HARSDORFF,Richard WOOD,Guillermo MONTT,Antoine BONNET
• DOI: http://doi.org/10.1111/ilr.12118
• Date: 01 December 2018
• Published date: 01 December 2018

International Labour Review, Vol. 157 (2018), No. 4

Copyright © The authors 2018

Journal compilation © International Labour Organization 2018

* International Labour Organization, emails: montt@ilo.org; harsdorff@ilo.org; bonneta

@iloguest.org. **

Norwegian University of Science and Technology, emails: kirsten.s.wiebe@ntnu.

no; moana.s.simas@ntnu.no; richard.wood@ntnu.no. The authors are grateful to two reviewers

and the editorial team for their valuable comments and suggestions. The authors declare no com-

peting interests.

Responsibility for opinions expressed in signed articles rests solely with their authors, and

publication does not constitute an endorsement by the ILO.

Does climate action destroy jobs?

An assessment of the employment

implications of the 2-degree goal

Guillermo MONTT,* Kirsten S. WIEBE,** Marek HARSDORFF,*

Moana SIMAS,** Antoine BONNET* and Richard WOOD**

Abstract. The Paris Agreement lays out the objective of keeping global warming

below 2 °C. The goal can be achieved by increasing both the share of renewables

in the energy mix and energy efciency. Such action entails a transformation of the

energy sector, which, given its linkages with the rest of the economy, will have a

knock-on effect on other sectors. Using scenarios based on a multiregional input–

output database, this article explores the economy-wide and worldwide employ-

ment impact of such a transition. Findings suggest that by 2030 most economies

will experience net job creation and reallocation across industries. Job creation is

driven by the construction, manufacturing and renewables sectors.

Climate change is one of the dening challenges of our age. There is

scientic consensus on the reality of humanity’s interference in the

Earth’s atmosphere, which has led to an unprecedented increase in the Earth’s

average surface temperature and a change in the climate system (IPCC, 2013

and 2014a; Steffen, Broadgate et al., 2015; Steffen, Richardson et al., 2015).

The Intergovernmental Panel on Climate Change (IPCC) highlights the many,

mostly negative, effects of climate change on the environment, societies and the

economy; and it has been suggested that the burden of these effects will fall

mostly on vulnerable countries and population groups (ILO, 2018; IPCC, 2014a

and 2018). The Paris Agreement, as part of the United Nations Framework

Convention on Climate Change (UNFCCC), has been ratied by more than

180 countries. It calls for aggressive action to keep the rise in global tempera-

tures from pre-industrial levels below 2 degrees Celsius (°C) in the long term.

International Labour Review520

Action to limit climate change is hampered by the fact that benets are

felt in the long term, while the costs are felt today. Nor is it aided by the fact

that those responsible for inducing climate change are not the ones who will

be burdened by its consequences (Stern, 2007). Indeed, real or perceived short-

term costs in terms of gross domestic product (GDP) growth and employment

may discourage the adoption of climate action, even if it would result in long-

term benets (Brekke and Johansson-Stenman, 20 08).

Given the importance of employment in the political economy of cli-

mate change (Babiker and Eckaus, 20 07), this article addresses the em-

ployment implications of the 2-degree objective. Does taking globally

coordinated action that would effectively limit global warming to 2 °C cre-

ate employment opportunities or job losses in the medium term? Will this

transition entail a reallocation of employment across industries? And are

economies ready for these structural changes? In analysing a scenario that

achieves the 2-degree objective, we nd that employment effects are small

for most economies. In all, more jobs will be created than destroyed and

a certain reallocation of jobs is expected. In identifying the industries and

economies that will experience job losses and reallocation, this article high-

lights the specic areas for policy action to ensure that a transition to sus-

tainability is also a just transition.

The remainder of the article is organized into four sections. In the rst

section, we describe how climate action impacts employment across the global

economy, noting that complementary areas of policy change are needed for

climate action to be employment-friendly. The second section describes the

data and methods used to estimate the medium-term impact of climate action

on employment. In the third section we present our results, and in the fourth

section we discuss these results and provide our conclusions.

The low-carbon transition and employment

Economies are currently heavily reliant on the emission of CO 2 and other

greenhouse gases (GHGs) in order to meet their energy and product demand

(IPCC, 2013 and 2018; Steffen, Broadgate et al., 2015).1 According to the IEA

(2016a) and the World Bank World Development Indicators database, despite

a reduction in GHG intensity over the past 25 years (in 1990, 0.82 kg of car-

bon dioxide equivalent (CO2-eq) GHGs were emitted for every 2011 pur-

chasing power parity (PPP) dollar of GDP; in 2014 this had been reduced to

0.48 kg), total GHG emissions grew from 39 to 54 gigatons of CO2-eq, on ac-

1 Energy demand is the main source of GHG emissions across the world. Taking action in

the energy sector alone would help achieve the 2-degree goal (IEA, 2015). Industrial processes are

another signicant source of GHGs, while an important source of climate change is the reduction of

the biosphere’s ability to absorb GHG emissions, notably owing to land use change (IPCC, 2013).

Employment implications of the 2-degree goal 521

count of GDP growing faster than reductions in GHG intensity.2 GHG emis-

sions stand far above the Earth’s capacity to sequester these gases, producing

climate change (IPCC, 2013).

Further reducing the carbon intensity of economic activity to bring about

a decrease in overall emissions is a fundamental element of a climate-friendly

economy (idem, 2014b; Ward et al., 2016). Given that energy is one of the pri-

mary sources of GHG emissions (IPCC, 2014b and 2018), advancing a climate-

friendly economy is underpinned by the promotion of energy efciency, on the

one hand, and increasing the share of energy sources that do not emit GHGs,

on the other.

3

This is largely acknowledged in the nationally determined contri-

butions submitted by signatories to the Paris Agreement (IRENA, 2017; UNEP,

2017) and by different agencies providing advice with respect to specic meas-

ures for the energy sector (DDPP, 2015; IEA, 2015 and 2017; IPCC, 2014b).

The International Energy Agency (IEA, 2015) lays out a path for the tran-

sition towards renewable energy sources and an increase in energy efciency

to achieve the 2-degree goal.4 At the worldwide level and compared to a busi-

ness-as-usual path that would lead to global warming of approximately 6 °C, the

IEA’s 2-degree path proposes a 55 per cent global reduction in electricity gen-

erated from coal, a 26 per cent global reduction in electricity generated from

natural gas and a 13 per cent global reduction in electricity generated from oil.

The 2-degree path also projects an increase in electricity generated from renew-

ables such as geothermal, wind, solar photovoltaic and nuclear energy and hy-

dropower (globally at 75, 75, 59, 46 and 16 per cent, respectively), among other

sources. It also projects a 9 per cent reduction in the total electricity generated

due to enhanced energy efciency. Table 1 outlines the expected differences in

energy demand by energy source between the business-as-usual scenario and

the IEA’s scenario to achieve the 2-degree goal.

A shift away from fossil fuels and towards renewables and energy ef-

ciency will undoubtedly affect employment in the energy sector, given that the

amount of labour needed to obtain a similar output differs according to the

2 Carbon dioxide (CO2) is the largest contributor to GHGs which, in turn, are responsible

for climate change. Other GHGs include methane, nitrous oxides and F-gases (HFCs, PFCs and

SF6). For the sake of simplicity, non-CO

2 GHGs are converted to a CO

2 equivalent (CO2-eq) based

on their global warming potential (GWP). For example, nitrous oxide (N

2O), emitted during agri-

cultural and industrial activities, has a GWP of 298 times that of CO

2. F-gases, commonly used as

refrigerants or re suppressants and in various industrial processes, have a GWP ranging from 124

for some specic hydrouorocarbons, to 22,800 for sulphur hexauoride. Energy-related emissions

consist largely of CO

2.

3 A low-carbon economy also requires the reduction of non-energy related GHGs, such as

emissions from industrial or agricultural processes. It can also entail the promotion of carbon sinks

(e.g. reforestation and afforestation) or the development of technology to capture and store GHG

emissions. As more than 50 per cent of these emissions result from energy demands, a low-carbon

economy cannot take place without specic attention to the energy sector (IEA, 2015).

4

In the Paris Agreement, countries pledge to follow their nationally determined contributions

(NDCs) to achieve the 2-degree goal. The analysis in this article focuses on the IEA and the path it

proposes to achieve that goal (IEA, 2015). We do not focus on the NDCs because a gap remains be-

tween what can be achieved with the currently dened NDCs and the 2-degree goal (UNEP, 2017).