Can We Imagine 2.8 Million New Jobs? 8.7 or 20 Million New Jobs?

Our new analysis estimates that mobilizing a cumulative investment of $1.2 trillion over the years 2021 through 2040 can reduce electricity end-use costs by about 40 percent by the year 2040. Says colleague and Sustainability Partners Senior Investment Partner Rick Gibson, “This is mostly about smart investments, an opportunity for the private sector to do what it can do so well, while also serving the good of the larger economy.” 

In effect, the investment is a stimulus that drives an average net employment benefit of 2.8 million new jobs per year even as the nation’s Gross Domestic Product (GDP) increases more than $580 billion (in constant 2012 dollars) by the year 2040. The investment would avoid on average $112 billion in air pollution and health costs (expressed in constant 2020 dollars). The cumulative benefit would be on the order of $2.1 trillion through 2040 (also in constant 2020 dollars). 

But the possibilities don’t stop there. An overall 40 percent decrease in total US energy expenditures—including all agricultural, industrial, building and transportation energy uses—would generate an average of 8.7 million net new jobs per year through the year 2040. A 100 percent transformation of the US energy system away from fossil fuels and nuclear power plants to clean energy would result in an average of 20 million new net jobs per year by 2040.

The status quo of subsidized fossil fuel is wasting money. In contrast, investment in higher energy efficiency is quickly paid back with savings spent locally. The net job advantage occurs because fossil fuel is capital intensive, whereas spending on clean renewable energy and energy efficiency savings is labor intensive, particularly if the new equipment is properly serviced for sustainable cost savings and energy and climate performance. 

The report’s findings are based on my Dynamic Energy Efficiency Policy Evaluation Routine (DEEPER) analytic model with five critical components: 1) policy and program stimulus, 2) annual energy efficiency investments with concomitant energy bill savings and related benefits, 3) sector job coefficients and their anticipated labor productivity rates, 4) cost of borrowing to drive the desired change, and 5) a net employment estimator based on input-output analysis.

As I’ve said on other occasions, the old thinking has focused primarily on the on-site energy supply jobs. But the new thinking considers the economy-wide benefits of energy productivity investments INCLUDING the direct stimulus jobs, the off-site supply jobs to build up a more productive energy infrastructure, and particularly the induced jobs from wage and profit spending which are added to the induced jobs when electricity cost savings are spent locally. 

My colleague, Gabrielle Dreyfus, also an author, said the “analysis makes clear that energy bill savings from new lower cost clean renewable energy, and cost-effective energy efficiency investments, spent locally, creates more induced jobs than direct and indirect jobs combined.” “Furthermore, she commented, induced jobs are sustained by continuous savings spent locally over the life of the investment.”

The analysis’s comprehensive calculations allow policy makers to choose investment that can target disadvantaged members of the community with investment to lower their electricity cost so that more money is available for nutrition, health, education, and other spending for improved quality of life. Energy efficiency and solar, in particular, can be ubiquitously built or sited at individual homes and businesses or neighborhoods. 

Out with fossil fuels and in with the new argument: the cheapest energy today and the most jobs come from renewables and energy efficiency. Here’s how it works:

“The surprisingly low cost of (energy efficiency and) renewables” will drive utilities to close most of the remaining US coal plants over the next decade according to the 2019 Morgan Stanley research report, “The Second Wave of Clean Energy;”

Accelerate the transition to low-cost clean renewable energy by investing in electrification with transmission upgrades and streamlined permitting while halting tax shelters, federal leases, and other subsidies of fossil fuel;

Select investments to recover from COVID recession on the basis of the combined value of the investment (including climate protection) and the sum of direct, indirect, and induced jobs accounting for savings on energy bills. Include in the analysis estimates of geographic distribution of jobs and the number of new jobs at each wage level, mindful that some jobs have greater upward mobility than others.

 The full descriptions of the scenarios, methodology, data, and validation see: [LINK]