 Hi everybody and welcome to our second edition of our U.S. Pathways Project webinar series. Earlier this month we heard from Michael Ginsberg talking about the research and development gaps in the energy transition in the United States and his work on the white paper chapter. And today we are joined by Erin Mayfield from Princeton University who's going to be talking about her research into employment in the low carbon transition and what that looks like in the U.S. context. So I'll ask everyone just to mute your lines and we are going to give the floor to Erin to walk us through her research today and highlight any gaps or key questions that she has stumbled upon and then open it up for input from the SDSN USA Network either by those who are on the call today or if you're listening to this in the future we will have some contact information to get in touch with her. So without further ado I will pass it over to Erin and we'll go from there. Okay thanks for listening in. So today I'm going to discuss the chapter on employment and energy system transition. So this is a work in progress and I'm happy to take any questions and comments at the end or via email. So I'll begin with the scope of the chapter. So there's a focus on the historical and current linkages between labor and energy for incumbent energy resources and technologies. So this includes an empirical review of local and regional labor market effects with a focus on employment. So we're not going to dive into income and income inequality and poverty and other types of labor market effects. The focus really is on employment. So I specifically look at the spatial distribution of employment, the distribution of employment across sectors like construction, manufacturing and utilities, and changes in employment and productivity over time. I'll also discuss other factors that affect employment such as labor economies of scale, automation, unionization, economic spillovers and supply chain dynamics. So with an understanding of the historical context we can then conceptualize future labor markets for existing technologies as well as emerging technologies and emerging labor markets. So lastly I'll synthesize some of the key implications for policy and how we can plan these employment transitions. So first is necessary to define what a job is and how employment is measured or estimated. So there are many ways to define a job with the difference largely relating to the duration of the job, so whether it's a short-term job or a long-term job. So the way a job is defined is often dictated by the data and the method used to model employment and often time jobs are referred to in terms of full-time equivalent. So for example a new power plant may generate 100 full-time equivalent jobs with each job lasting 25 years. So here though, and in the remainder of the presentation, I'm going to define it as a full or port-time job that is also a direct job and I'll explain what that is in a second and this job is held within a single year. So it can equivalently be referred to as what's called a job year. When I vary from that definition, I will clarify these. There's a few points at which we can't estimate in terms of directly jobs. Okay, so another important definitional issue to address is the distinction between growth and net job impacts. So growth effects include only the positive impact on employment associated with a particular investment. So growth jobs can be created when money is spent on projects that requires things like manufacturing, installation, O&M, new equipment. However, growth jobs really aren't the full story. So net jobs can be created when the potential negative impacts of those investments on the wider economy are taken into account. So in particular, it's important when considering net employment impacts of renewable energy and energy efficiency investments to consider jobs that might be displaced in other parts of the economy as a result of that investment. So a lot of times policy reports and statements tend to report a positive employment effect more so than in the academic literature. So examples are such things as the Green New Deal or in the beginning of the Shell Gaston when you're talking about the potential economic benefits, you oftentimes have estimates are often terms of purely job creation. So it's not this net job effect necessarily. And there's two important job stories that I'll go into in more detail that are really occurring in tandem. So they're both important from a policy making perspective. That is one from job creation, from deployment of low carbon technologies. And the other is job loss from moving away from fossil fuels. Another important distinction is between direct and indirect and induced jobs, which are components of these concepts of net and gross jobs. So direct employment refers to those jobs that arise directly as a result of an investment. And so there's no really single accepted definition in the literature, but a useful description is jobs, direct jobs are those created in the design, manufacturing, delivery, construction, installation, management and operations maintenance of a technology. So indirect jobs are those within the supply chain supporting a specific project. And so in the construction of a wind farm, for example, this may include jobs and companies that provide raw materials to manufacture wind turbines such as steel and metals and suppliers of supporting structure materials, induced jobs results from increased household expenditure. So the wages paid to direct or indirect employees are then spent on goods and services supporting further employment. So this can include non-industry jobs that are created like teachers and retail jobs. And with respect to energy efficiency, for example, induced jobs are largely created by the household savings and increases in expenditures on other goods and services. And the last point of background with respect to how to measure a job, there are a lot of different methods and it depends whether you're looking retrospectively or in the future. So each of these methods has different applications. So retrospectively, you have surveys, census data, tax filings, which give you estimates of jobs. You can also use different types of econometric approaches to understand the impact from previous activities. So you can see the marginal effect from, for example, the coal boom and bust or the shale gas boom. There's also different types of methods for estimating future jobs. One is an analytical bottom-up model of employment. There's also input-output modeling, CG modeling and macroeconomic modeling. So going back to the idea of net jobs, numerous studies have examined this net employment effect of renewable energy and energy efficiency, although few have modeled the effects of rapid deep decarbonization. So we can't, in this presentation, I'm not going to go over that, but that's part of teacher modeling that we're doing and we're building an analytical model to do that. So now I'm going to step through the current energy employment situation, compiling several different data sources. So I should mention that these, so here it's a look at, in 2018, the current job situation. So currently, about almost 7 million jobs are energy-related. And so that comprises about 4% of the current labor force. And this figure is a snapshot of the distribution of jobs across some of the major sectors, but this doesn't represent all energy categories. So there's major things missing from this, like motor vehicles, which are very much in part a part of the energy labor market story, especially when considering deep decarbonization scenarios. So energy, you see from this figure that energy efficiency is the largest industry, representing almost half of energy-related jobs. And you also note that about a third of energy-related jobs are within the fossil fuel industry. So that includes petroleum, natural gas, and coal. And then things such as solar and wind represent a pretty small fraction of total jobs currently. So this is a snapshot of the current distribution of employment by major economic sector, like construction and manufacturing and agriculture. So we'll start by focusing on the distribution across sectors on total energy employment. So you'll see that most current employment, almost half, is in the construction sector, then professional services, and that includes some trade in there, and the third main category is manufacturing. So again, this is a snapshot given current development cycle. So now I'm just highlighting three industries, specifically coal, natural gas, and petroleum. And you can see that a third of the fossil fuel jobs are in mining, in the mining and the extraction sector. And these differences in the sectoral distribution across fuels are largely related to where they are in the development cycle and how the fuel is used. So you can see coal, which is declining. You have very little construction and manufacturing, whereas natural gas, you still have a lot of the mining and extraction jobs, but you also have a lot of manufacturing and construction jobs. So jobs from new generation, from drilling, as well as from new transmission. And then you see petroleum, as well, which you have a large fraction of the jobs are in the mining and extraction sector. Nuclear is another interesting study, which is different than the distribution for fossil fuels. So nuclear has been pretty stagnant. So you don't have, again, a lot of manufacturing and mining. Basically it's within the utility sector and related to ONM. And then last, I'll just point out for solar, wind, and energy efficiency. So employment is largely in construction and manufacturing. So again, this just provides a snapshot of the distribution across sectors now. But as you build out more renewables and more low carbon technologies, you're going to have a shifting in the distribution across these sectors. There's also going to be impacted with respect to international labor markets, how much manufacturing we onshore and offshore, a lot of different types of system level effects. You're also going to see labor economies of scale, which is going to shift the distribution between different sectors, as well. So again, this is a snapshot of what it currently looks, the current situation. So now I'm going to just walk through five examples of current energy sources or technologies. So I will provide an overview of the past and present employment situations. So this includes the spatial, factorial, and temporal distribution of employment. Then I'll provide, at a high level, a conceptualization of future employment under different steep decarbonization scenarios. So the coal industry is relatively small, supporting about 160,000 jobs, associated with coal production and coal power generation. And so employment within the coal mining sector itself represents about a third of industry-wide coal employment. So it's not all coal mining-related jobs. So this established industry is in decline with coal mines and power plant shuttering. You have residual employment, which is also in the utility and professional service sectors with very few construction and manufacturing jobs. So here you see the two maps of the spatial distribution of coal industry jobs. On the left, it's more on the production side. On the right, it's on the generation side. And so a lot of the production jobs are still concentrated, spatially concentrated within Appalachia and Wyoming. And if you consider how much of an impact coal employment has with at the state level in West Virginia, where it represents the highest fraction of all other states with respect to employment, it represents about 2% of employment. So it's a fairly small percentage of employment at a state level. However, coal is a dominant employer in several counties. So this figure on the right shows the percentage of a county-level employment that is supported by the coal industry. But this is all direct, so it's not all the induced jobs that are also supported by the coal industry. And you'll see that these 35 counties greater than 5% of employment is within the coal industry. And you see at least one county in West Virginia where 25% of jobs are within the coal industry. So we've looked at jobs spatially how they're distributed. And now thinking about jobs over time, we've seen over the past three decades, employment in coal mining industry has declined dramatically on the order of about 60%. So this is equivalent to an average decline rate of about 3% per year or 3,000 jobs per year. And there was a peak decline in 2016 of about 20%. So this figure shows in blue it's production, and in the red that is employment over time. So you can see that deep decline in employment. So then the question is, what does this say about future coal employment? So phasing out coal will have the greatest impact on resource dependent rural labor market. Even if in aggregate it's a small number of jobs, it will have a great impact on the certain community. And so phasing out coal by 2030, for example, implies a decline rate on the order of about 4,000 jobs per year. So this is really very similar to historical decline rates, which we observed on average were about 3,000 jobs per year. And the figure here just shows a very simple depiction of 4% decline in jobs per year to 2030. So the next industry I'll describe is the natural gas employment. So natural gas industry is relatively large, supporting about 600,000 jobs, and this is because of the shale gas boom. So the shale gas boom over the past decade resulted in increasing employment across the value chain. So it wasn't just extraction jobs, but you also had transmission and distribution jobs because you had new transmission and distribution capacity builds. So that represented almost 40% of employment. And then there was also additional employment in the generation segment. So employment is largely concentrated in the Appalachian and Permian Basins. So you can see the figure up top is all employment related to production. So you can see a lot within Texas, and then you can see some within Pennsylvania, Ohio, and West Virginia. And the figure on the bottom is the distribution of jobs related to generation. So whereas most of what I've been talking about are direct jobs, here is an example of direct and induced jobs. And so this is based on an econometric study or using a fixed effect model to isolate the employment effects of the shale gas boom in Appalachia. So this shows the cumulative employment effect from 2004 to 2016. And so to orient you, this is showing mostly Pennsylvania, Ohio, and West Virginia. And where employment is concentrated, it's mostly in your producing regions. And another thing to point out here is that natural gas extraction is a dominant employer in some rural communities similar to the cold story. So in one county in West Virginia, for example, it represents 70% of the labor market. So that's, again, not just direct jobs, but also spillover into other parts of the economy. And another point is most of these jobs are rural jobs, and it's not just the generation-related jobs, but I mean rather the extraction-related jobs, it's also the generation jobs. And another element that is a little bit different than the cold boom and bust employment story is that in the natural gas industry, with the shale gas boom, a lot of the labor force is transient. So they're not necessarily pulling from the local labor market or the local labor force. So this is showing employment over time. So similar to the previous figure, the figure on the top there in red shows employment over time, but whereas we were just showing the bust period for coal, this shows a boom and bust. And what you'll notice is that from beginning in about 2005, production, which is in blue, has just been constantly increasing, whereas employment has peaked in about 2013, 2014, and then has just declined. And what's happening there is that you have reduced drilling, you have reduced activity, but you also have labor economies of scale. So between 2004 to 2016, for example, the number of workers needed to drill a single well declined by about 70%. So you have a lot of industry learning occurring as well. So what does this mean for the future of natural gas labor markets? So regardless of the decarbonization pathway taken, there is momentum of the shale gas dome that's going to continue to support natural gas related jobs in the near term. So you already have a lot of planned and permitted wells, capacity, and petrochemical plants. There's plans for an expansion of the petrochemical industry in Appalachia. So you already have some momentum. So there's going to be like a long, long tail with respect to a decline in natural gas employment across the value chain. There's also going to be new jobs in decommissioning and recommissioning, well-head areas as well as transmission and distribution infrastructure, and this is really dependent on how natural gas is used within future transition scenarios. And so a decline in natural gas mining and transmission industry employment can be countered by carbon storage and exploration and sequestration activities. And this is because there may be some transferability of the associated skills and a lot of these workers are geographically transient as well. So now moving into nuclear employment. So nuclear industry is relatively small, supporting about 70,000 jobs which are distributed across generation and fuel segments of the value chain, and are concentrated in regions mostly with high generation, right? You don't have a large supply chain effect within the nuclear industry. So you're seeing most jobs are at the plant level. And so this shows nuclear utility industry employment over time. And so you'll see from 2005, employment has nearly doubled, file generation has been flat, and there's been a lot of large employment swings over time with annual rates of change ranging from about negative 6% a year to upwards of 30% a year. So what does this entail for the future? So without expanded nuclear capacity, industry-wide employment is still unlikely to contract over the next 30 years. So you have operational jobs that can be displaced by decommissioning and waste management jobs depending on transferability of skills. You also have operational life extensions which will sustain some of the operational jobs. So this figure on the bottom just shows the employment life cycle of a plant. So you have first 10 years, you have a lot of construction jobs, then over the life of the plant you have a lot of O&M jobs. And then followed by after the closure of the plant you have your decommissioning and waste management job, and a lot of these waste management jobs will persist for long periods of time. So in future scenarios in which nuclear capacity expands there will be additional construction and manufacturing jobs as well as additional long-term operational jobs. So moving to wind employment when the wind industry is also relatively small supporting about 110,000 jobs, but they're not just installation and construction related jobs. There's also substantial domestic manufacturing of a lot of different components given the size of wind turbines and the scale of these components. So this figure on shows the location of active wind related manufacturing facilities. So they're not just concentrated in areas with high wind resources, they're actually distributed over many different states. Another thing to point out is that the U.S. is a net importer of wind equipment and so this has implications for when you're thinking about future labor market and job creation. With respect to the spatial distribution of wind jobs we can see that they're concentrated in regions both with high wind resources like Texas, but also in manufacturing hubs of the Midwest and the Great Lakes where wind resources are relatively small. We also observed that there's been great labor productivity increases over time. So even though it's a small industry at present there's still been a lot of productivity increases. So over the past decade productivity increased by about 60 percent which is about 5 percent per year. So what does this mean in the future? So the wind industry employment will expand by orders of magnitude and construction employment will be concentrated in regions with high wind resources but there's also depending on where you have policies or other things that may constrain or where wind is cited. There's also going to be a lot of transient construction and manufacturing jobs as well as additional long-term operational jobs. The domestic manufacturing employment growth really depends on international labor markets or how we source from international labor markets. And you also may experience, there also may be local labor market shocks during periods of rapid expansion and you may see some development or boom and bust cycles. Not exactly the same as coal and natural gas but have some cyclical features. So the last area that I'll focus on is solar employment and it's very similar to the wind story. So solar industry is relatively small at present. And another point is residential solar is more labor intensive than utility-scale solar. So although residential solar accounts for a majority of jobs, utility-scale solar represents a majority of generation. And so these jobs are facially concentrated at present based on where there are high solar resources but also where you have support and regulation. So you see a pocket of jobs in California but you also see some in the northeast as well. So the future labor market story is very similar to the wind story so I won't go over that in any detail. Okay so now that reviewed a couple of the main industries in detail. Now I'm going to take a step back and talk about some larger features of employment. So briefly I went over the spatial distribution of employment by technology. This is looking at all energy employment in 2018 and the spatial distribution. So the blue shades of the states are total consumption and the size of the bubbles are the size of the labor market so you see that California and Texas which are large consumers and they're also large employers. But that's not the story really across all states it's not only related to consumption right? As I said occur at different points in the value chain that can be spatially dispersed from where consumption or production is occurring. So I showed these figures before so it changes in employment over time for coal, oil, natural gas and nuclear and I wanted to do the parallel analysis that you see when people talk about infrastructure rates of change or changes in capacity doing the parallel type of analysis or rates of change of employment. So just to review this show is the employment rates of change over the past five to ten years for coal mining, oil and gas extraction and nuclear power generation. So the gray bars show either the maximum absolute decline rate or the maximum absolute increase and both of these are important because you have some industries that are phasing out some industries that are going to greatly expand. You want to understand how rapidly you can marshal a labor force and how rapidly a labor force can contract right? So the coal mining mystery demonstrates the employment effects of phasing out of a technology. The oil and gas extraction boom and bust cycles demonstrates the volatility of labor markets and the rapid mobilization and decline of employment and we already went over the decline rates in previous slides so I won't repeat it. There's a few things to point out though so the oil and gas employment boom and bust serve as an analog for potentially, for the potential to rapidly scale up a labor force to build out wind, solar energy efficiency and other low carbon industries where you have a lot of construction related jobs. Another thing to point out is the rate of change so that's shown in the bubbles. It's less transferable to think of these rates of change in terms of these other technologies but they're there as a point of reference. So another concept that I wanted to review is employment factors. So employment factors are normalized measures of the amount of labor services per unit of energy consumption production or some other unit of activity of activity and there it's a way of comparing different technologies so these employment factors can be variably defined so here I take a top down estimation approach computing employment factors based on reported 2018 domestic and direct employment and consumption so this compares employment normalized by consumption in units of jobs per trillion BTU so you see that you have here your more established nuclear and fossil fuel industries as have much lower employment factors than smaller scale solar, wind, biomass and hydroelectric industries so this is consistent with many other studies that have observed that renewables and energy efficiency are more labor intensive than conventional energy especially at the construction manufacturing and installation stages and so the employment factor for nuclear is the lowest reporting about nine jobs per trillion BTU this is in part because the capacity is not expanding or contracting you also see that expanding solar and wind industry have the highest employment factors so wind is orders of magnitude higher than nuclear for example at about 200 jobs per trillion BTU for wind about 50 jobs it's about 50 jobs per trillion BTU and so the very high employment factor for solar for example is largely a result of very labor inefficient distributed solar and although I don't show it here I also estimate these different types of employment factors that are normalized using energy activity factors that are more closely associated with a given industry and supply chain segment so for example mining jobs per billion cubic foot of natural gas production and I also would noticefully missing here is energy efficiency so I developed those but in different units that aren't normalized based on consumption another thing to note is that these employment factors are snapshots in time and based on the current distribution of energy activity across supply chain segments so as industries expand and contract as the economy just carbonizes employment factors are going to change so employment factors can change as a result of labor economies with scale automation learning domestic supply chain interactions fossil fuels may become more labor intensive than low carbon infrastructure so for example decommissioning requirements for fossil fuels may increase employment factor in the long run when solar and wind retire penetration and labor intensive construction and manufacturing activities start to subside employment factors will also likely be much lower so going back to one of the previous slides really quickly um employment also factors also vary geographically so I didn't go over what the color of these bubbles means and what these are the shades represent the employment factors the jobs per billion btu of consumption so as I said employment factors vary geographically and so this variation results from the industry scale and regional experience for example you can see Illinois and Pennsylvania have the largest nuclear factories and relatively low employment factors there are physical physical differences in resource supplies and despite having relatively coal mining large coal mining sectors within Appalachian states for example employment factors are high in these states and that's in part because most mines are underground and subsurface so there's a lot of reasons for variation in employment across these different states another element is there's a differentiation in state and local policies and regulatory requirements that could also impact these factors as well and there's also as as wind is a good example of this there's also regional differentiation and participation across different segments of the supply chain so I wanted to point out quickly a couple of other additional factors some of which I went over already one is the idea of boom and bust cycles we can see it in coal and natural gas but we also might observe the same thing in emerging labor markets with wind and solar for example there's also evidence of changing how or we see how automation learning and labor economies of scale change the size of the labor market as well another thing that I didn't discuss is that labor impacts the cost of the technology so you see some of the cost declines for example associated with extraction or wind some of that is associated with the labor economizing on labor so there's that interplay as well I didn't talk about much with respect to skills and education that's another important element of employment also I won't go over in detail but union unionization is a factor unemployment is a factor and here we're just focusing on employment effects but there's a lot of other labor market effects like poverty income inequality and income so now I'm going to walk through quickly some of the major implications for planning and policy so labor markets can accelerate or constrain the rate of decarbonization so whether or not you can marshal the employment to build out certain infrastructure or whether that's going to be actually constrained new buildouts as well there's also it also plays into the larger narrative so you can think about coal mining jobs so it can influence public support for certain types of policies the second point is that labor markets are impacted by a variety of different policies so not only do labor markets impact decarbonization labor markets are impacted by the way we structure these different types of policies there will be job losses from phasing out fossil fuels that will impact rural communities that are dependent on on extraction there will be job gains from expanding low carbon infrastructure that will be distributed across many sectors especially construction and manufacturing and these gains will also be distributed across multiple regions so not only in energy resource rich areas and it's still unknown where a lot of these things are really not site dependent these parts and value chains that are not site dependent where those jobs will be created another thing to highlight is that jobs will both be long and short term so you're going to have some of your short term jobs related with construction but consider that the transition is over a 30 year period so even you might be building in one place and then whether that is transient labor or not you might move to another place not also going to have long term jobs related to operation maintenance for example and you can create countervailing policies that moderate some of the negative impacts that are associated with the potential labor market boom and bust cycles and then finally there's competing societal and private objectives when it comes to employment so with respect to a private private objective you might be economizing on labor whereas in that might be in contrast to societal objectives where you're trying to grow a labor force within a different region you might care about the distribution of employment as well and something that I haven't even gone into here is the idea of how employment plays into a concept of a just transition for example and so I'll end there and with that I'll happy to take questions and receive any feedback thanks thank you Erin wow you've been busy that was very impressive and I think the way that you're starting to frame your analysis looking at those different elements the temporal and spatial aspects of across those different sectors is really interesting and going to end for a really interesting analysis any questions on the line right now or comments I have a question hi Alana Lynch I'm from SDSN USA and thank you so much this was really insightful I really appreciate what you were offered to hear I would be interested to learn more about the distribution of short-term and long-term jobs within and across the sector so if there's a way to compare how different energy forms have short-term and long-term labor implications I would be interested to learn more about that in future programs great Erin did you hear that just making sure yeah I saw that you had sorry sorry sorry I muted myself um so yeah the plan was to do something equivalent as was done for nuclear which shows like over almost over life cycle of a plant so over the life cycle of different technologies to give a different perspective on the distribution of jobs in the short run and the long run so that's that is part of the plan amazing thank you great any other comments from callers I'll jump in Erin I just had two quick comments just for consideration I just looking at the beginning so obviously we've covered pretty much the major and most interesting sectors currently in the US and I know from the first graph you showed of all of the different a number of energy jobs per technology I think batteries could be a really interesting space also to compare in this analysis only because they are such a linchpin for obviously the integration of renewables and also in the transport sector and I've heard something about gigafactories being built in America and what does that mean for the American workforce and so that might just be a blip on the radar and I did see it was at the bottom of your list on that first graphic in terms of numbers currently but it'd be interesting to see what the battery market and what some of the limiting factories of that are in our country are in the future given that it's so important for a lot of these technologies yeah I agree and I think batteries and more broadly how the motor vehicle industry is going to also shift which plays into that I think it's a really important narrative yeah and then my second and I'll stop here and then we can look and shortly I was just thinking so this obviously the American story I've just looked at how far back you went in time and it makes sense because you're looking at like the shale gas revolution and comparing that so we're talking about the late 90s early 2000s given that this I mean an energy transition takes something like multi decades 30 years or so it might be interesting to do a call out or a very small case study looking at maybe one of the Nordic countries who have already done somewhat of a transition over the last few decades and see kind of what were the enabling factors and what did it mean for their workforce and why were they able to do that transition that might lead you down a very deep rabbit hole but it also could just be an interesting comparison or story of hope to support this okay that's a good idea I hadn't really dove into thinking about the situation more broadly I could say the only long-term analog that we have in the US and for which we have longer term data and it's not a transition towards a low carbon economy but a different type of energy transition and that is many decades of coal and boom bus cycle so I have a little bit of that in the write-up which goes back to the 70s but that's really the closest thing I have right now considering those time horizons great Aaron I don't you might not know this answer and sorry to put you on the spot because I hadn't asked you before this webinar but do you know kind of what your editorial process looks like moving forward as far as a timeline just so that we can give our listeners an idea of when there should be have an opportunity to give you feedback until okay I'm still trying to complete the write-up so I think that'll be another week and then I'm not sure with respect to some more internal review and how long that would take so I can't give a solid answer right now but into the new year we'll have some availability so if people had thoughts you'd still be able to yeah actually incorporate it okay yes yeah great well thank you so much for your time and your excellent presentation and can't wait to actually read the chapter for everyone listening we will be doing one more of these webinars on January 7th where we're going to be looking at the geospatial sighting of a lot of these resources which overlaps with both the r&d chapter and this employment chapter so tune in to hear Grace Wu present on that on January 7th and I'll send a reminder ahead of that thank you again Aaron and we'll be in touch and everybody if you want to get in touch with me or Caroline or Aaron directly her email is at the end of the presentation thank you okay okay bye