Renewable energy will boost economy and create jobs, study finds
A study on the impacts of supporting renewable energy sources (RES) on the EU's economy has shown that increased support for RES will have a positive effect on the economy and will create a significant number of jobs. The study, carried out on behalf of the European Commission's Directorate-General for Energy and Transport, is the first to assess the economic effects of supporting RES in detail. At the end of 2008, the European Parliament and the Council of the European Union agreed on the Renewable Energy Directive, which commits EU Member States to achieving the ambitious target of a 20% share of renewable energy in Europe's final energy consumption by 2020. Understanding the impact of existing RES policies is crucial to ensuring these targets are possible. The researchers used several economic models to establish how RES policies currently affect the EU's economy and job market, how they did so in the past, and how their effects might change in the future. They looked not only at the RES sector itself, but also at its impact on all sectors of the economy including the 'conventional' energy market, households and the hospitality industry, to name a few. The findings bridge substantial gaps in our knowledge of the economic implications of RES policies in Europe. Specifically, the study used an output model called Multireg to assess the effect of developments in the RES sector on other economic sectors in the past. To forecast future developments, the researchers used a model called Green-X, which was designed to simulate the effect of RES support policies up until the year 2030. Based on this, future economic effects were calculated using two independent macro-economic models: Nemesis and Astra. Two models were used so that the results could be compared and validated. The results of the study have also been peer reviewed. According to the researchers, 'the RES sector is already a very important one in terms of employment and value added. New industries with a strong lead market potential have been created, which contribute about 0.6% to total GDP [gross domestic product] and employment in Europe. This development is likely to be accelerated if current policies are improved in order to reach the agreed target of 20% RES in Europe by 2020'. To project the future impact of RES policies, three scenarios were compared: one in which all RES support policies were abandoned, a second 'business as usual' scenario, and one in which RES policies were considerably strengthened. The results clearly showed that stronger policies are needed if Europe is to reap maximum economic benefits from RES. 'Recent strong growth in comparably low-cost biomass and onshore wind projects needs to be sustained, as these technologies are expected to generate most of the near-term future RES production, employment and economic growth,' the study reads. 'More innovative technologies such as photovoltaic, offshore wind, solar thermal electricity and second-generation biofuels require more financial support in the short term, but it is precisely these technologies that are key to achieving the EU's 2020 RES target and higher shares in the future, to maintain the EU's current competitive position in the global market for RES technologies and to increase employment and GDP in the midterm.' According to the report, 'policies promoting technological innovation in RES are therefore essential to strengthen the first-mover advantage of Europe's RES industries. If successful, these technologies can help the EU maintain a higher world market share of RES and the net GDP advantage is expected to be about 10% higher than [business-as-usual figures] for 2020'. Importantly, the study found that while the 'increased support' scenario achieves 20% RES in final consumption by 2020 and 30% by 2030, the EU targets are not achieved in the business-as-usual model (14% by 2020 and 17% by 2030). 'Besides proactive RES support and framework conditions,' the researchers state, 'vigorous energy efficiency measures appear to be beneficial in achieving the EU's RES commitment at low-to-moderate cost.' The gross figures for GDP and job increases due to increased RES support are rather impressive, but the study was careful to offset these with expected losses, such as replaced investments in conventional energy technologies. The net findings were that current RES policies in EU Member States will result in an increase of GDP by 0.11% to 0.14% by 2020 and by 0.15% to 0.30% by 2030. In the more ambitious policy scenario, the net result would be a much stronger increase in GDP (by 0.23% to 0.25% in 2020, and 0.36% to 0.40% in 2030). The results for Astra and Nemesis were consistent, but there were some differences. In terms of net employment gain, business-as-usual RES policies in EU Member States combined with moderate export expectations will result in a gain of between 115,000 and 201,000 employees in 2020 and between 188,000 and 300,000 employees in 2030. But the stronger-policy scenario will lead to a higher increase in jobs, by between 396,000 and 417,000 employees by 2020 and between 59,000 and 545,000 employees in the last years before 2030. This large spread is due to a difference in the way the models factor in rising energy costs. Energy Commissioner Andris Piebalgs said, 'This shows that benefits of renewables in terms of security of supply and fighting climate change can go hand in hand with economic benefits.' The study was carried out by Employ-RES, a consortium including companies from Germany, Austria, France, Lithuania and Switzerland.