The Future of Jobs in a Low-Carbon World

Every year, ministers and officials from almost all countries in the world meet to discuss how to tackle the problem of climate change. This annual gathering is known as the Conference of Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). At the 2015 COP in Paris, countries agreed to limit global warming to well below 2°C compared with the average temperature that prevailed before the Industrial Revolution started escalating the burning of fossil fuels. Fossil fuels like coal, oil, and gas have become the backbone of the industrial economy, which is why climate policies that aim to cut back on the use of such fuels are seen as difficult and expensive.

This year’s COP draws attention to a very important challenge – how do we make sure that action on climate change is fair and just to people and that the transition away from fossil fuels does not have adverse impacts on industrial jobs and economic growth?

New jobs in the low-carbon economy
Climate policies could lead to job losses in fossil fuel-based industries like coal mining, petroleum refining, and thermal power generation. There could be negative impacts on industries that are heavy users of coal and diesel. A greater emphasis on public transport might also lead to reduced manufacturing of diesel cars for private use. The International Labour Organization (ILO) estimates the loss of 6 million jobs by 2030 as a result of such shifts.

Fortunately, there is a positive side to this transition. There are growing economic opportunities with the emergence of low-carbon industries like renewable energy, electric vehicles, green buildings, and recycling. In 2017, more people were employed in the renewable energy sector than in coal-related jobs – more than 10 million worldwide. Going forward, the ILO estimates that 24 million new 'green' jobs will be created by 2030, including 2.5 million jobs in renewable energy. The New Climate Economy report uses a global macroeconomic model to show that ambitious climate policies (like carbon pricing, withdrawal of fossil fuel subsidies, and circular economy) can generate economic benefits of USD 26 trillion and 65 million new jobs by 2030. For India, a 2017 study by NRDC and CEEW estimated that the installation of solar and wind power capacity can directly create 330,000 new jobs in India by 2022 with an additional 45,000 jobs in manufacturing solar modules. Furthermore, enhanced electricity access through renewable energy can boost the creation of microenterprises in rural areas.

While the number of new green jobs may eventually offset the old polluting jobs, how can we ensure that this transition to a low-carbon economy does not create hardship in the interim? What might a just transition look like?

A just transition needs new skills
The new jobs that are emerging in the renewable energy sector need new skills and training. In India, for example, the Skills Council for Green Jobs offers vocational training courses for a range of new job opportunities such as rooftop solar PV installer, wind power site surveyor, solar water pumping station engineer, solar lighting technician, portable improved cookstove assembler, and biomass depot operator. The Suryamitra skill development programme of the Ministry of New and Renewable Energy also provides free training programmes across the country for solar jobs.

There is a strong need to keep scaling up and increasing the reach of such training opportunities to poor people who lack the information, educational qualifications, and resources to acquire such skills. The timing and location of such programmes need to be made more conducive to the participation of women. Placement guidance and recruitment platforms need to be provided so that people, especially in rural areas, can access job openings in a timely manner.

A just transition needs new investments
Improving access to finance, new business models, and prudent investment are all needed to fully realise the employment generation potential of the low-carbon economy.

Banks should make it easier for small entrepreneurs, especially in rural areas, to access finance to set up solar charging stations, battery swapping stations, rooftop PV installation businesses, green building construction, and other such clean energy enterprises. Timely information and simpler requirements will make it possible for small entrepreneurs to be nimble and adapt to changing market demands.

Large companies should take responsibility for reducing fossil fuel use in their supply chains, in the process helping small enterprises that are their suppliers or distributors to make this transition.

Financial institutions, including public banks, mutual funds, insurance companies, and pension funds, should disclose their investments in fossil fuel assets that might become unprofitable over the coming years as climate regulations become more stringent.

A just transition needs safety nets
A 2017 study by WRI India found that the jobs created so far in the solar PV sector in India tend to be contractual in nature and do not provide job security or benefits. Social protection and safety nets are needed to ensure that this sector continues to grow and attract talent.

Social protection and safety nets are crucial for occupations that are directly at risk from low-carbon policies, such as coal mining, petroleum refining, and thermal power generation. Government, industry, and citizens can also work together to provide a space for social dialogue with trade unions, civil society groups, and consumer forums.

Finally, there is a need to prepare for the larger economic ramifications of low-carbon policies. For example, a carbon tax on the truck and rail transport of goods could have a ripple effect on prices. The withdrawal of free electricity for farmers to rationalize the use of electricity for irrigation, could further increase the cost of cultivation.

The kind of climate change policies that are being debated at the COP may set in motion a jobs transition on the pathway to a low-carbon economy. At the same time, jobs in India are also affected by increasing automation in the manufacturing sector and changes in global trade policies. With thoughtful policies that build human capital, make prudent investments, and provide social safety nets, the low-carbon transition can be a just transition.