The impact of the lock-down on energy use has been widely discussed, for example in the power sector. As attention turns to recovery, a new conversation is opening up around whether investment in the low carbon transition will help or hinder post-COVID economic growth. Some commentators have suggested that we might have reached ‘peak net zero’ as attention turns away from climate change and towards conventional economics, much as it did with the 2008 financial crisis. Some have argued that it is too expensive to even think about climate mitigation, although most commentators point more to the opportunities.
So what do we know? The first point is that the lock-down itself has the potential to lead to profound changes that affect energy use – mobility patterns and home working being the most obvious. Some reduction in commuter and business travel seems likely as a result of our collective experience of using virtual platforms. However, we do not know how substantive any long term impacts will be. There could even be a rebound that sees demand go bigger than ever as low fuel prices and pent up demand finally spill over into a great rush of leisure journeys, or ongoing social distancing as working life resumes drives more people to, well drive. We do not yet know and similar questions surround electricity use or the role of behaviour change as a tool of policy.
A bigger question for the post-COVID periods will be whether investment in renewables, electric vehicles, insulation, efficiency and the rest creates jobs. UKERC investigated these issues back in 2014 and the principles remain the same. The first point is that any economic activity creates jobs – to misquote Keynes, digging holes and filling them in will create jobs. It is more helpful to think about net jobs. Low carbon sectors will grow, creating jobs. But people in the high carbon sectors that gradually disappear will lose jobs. From herein the evidence becomes a bit of a maze. Some low carbon options may be more labour intensive than some fossil fuel options (and hence create jobs per unit of energy), but the evidence is mixed – it depends. We also need to think about wider economic effects: if a low-cost factor of production, such as fuel or power, is substituted for something more expensive then overall economic efficiency would be expected to fall. All else being equal this would reduce output and hence employment. In reality, fossil fuel and renewable energy options are pretty similar, even with the recent falls in fossil fuel prices, so this impact is not likely to be large. How large is important to measure and understand. It will vary between low carbon options and across a range of fossil fuel price scenarios that it is impossible to predict.
Perhaps it is more productive, literally and figuratively, to focus on things that we would like to do for a variety of reasons – for better economics, social benefits and to benefit the environment – then prioritise those that can also help create jobs. Some low carbon investments have long been win-wins, cutting emissions and reducing costs. An example is retrofitting houses with improved insulation that will reduce bills, make buildings more comfortable, and help meet emissions goals. This also just happens to be pretty labour intensive and geographically widespread, creating lots of opportunities for skilled manual labour. Not all low carbon endeavours offer the same benefits. Some offer a small number of mainly specialist employment roles in specific regions (though this may benefit disadvantaged regions as highly paid jobs helps benefit the wider economy).
Yet we already know that we want to transition to a lower-carbon energy system. Low or zero carbon targets are already hard wired into legislation in many countries. So the question is not whether we should do low carbon but which bits of the decarbonisation story are most likely to be most useful over what time frames in the context of an economic stimulus. What to do cannot be worked out from first principles. There is no rule of nature that says either that low carbon has to be a burden on recovery, or that it has to be a huge boon for jobs. Instead, what is needed is a dispassionate analysis of the economic value of the low carbon commitments we have already made so that we can prioritise low carbon opportunities that appear most promising in the context of a stimulus package. This means looking at the types of jobs and locations, as well as the wider economic impact and social value. Governments need to look at the evidence and pursue most urgently those options that appear promising on all fronts; more efficient, lower emission, less expensive, and offering opportunities for economic benefits and well-paid jobs.