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Policy report: Defining, Measuring and Predicting Green Jobs

The purpose of this paper is to assess the “state of science” in defining, measuring and predicting green jobs. Estimating economic impact, including creation of jobs, of any major investment scheme is difficult as multiplier effects can change over time and there are often unintended consequences. The longer the time horizon it is, the less dependable do input-output coefficients become for predicting future jobs. With green jobs, there are further complications such as their definition and assumed labor intensities. Many of these industries are relatively new; some technologies are not even deployed in commercial scale. As such, the estimates of jobs per $ investment or per unit of energy output depend on small data sets, which probably renders them less reliable. Government support in the form of subsidies, tax breaks, direct investment grants, domestic content requirements and the like complicate the analysis further as these policies distort comparative cost advantages and often lead to adoption of more expensive technologies that impact the rest of the economy; can be transitory; can be redirected to different technologies; and can change over time. All of these uncertainties add to the inherent lack of precision in any modeling exercise and necessitate additional scenario and sensitivity analyses to cover all reasonable paths of development. 

Overall, we conclude that adding “net jobs” cannot be defended as another benefit of investing in green energy (alternative energy technologies, energy efficiency and conservation). Each option offers benefits such as lower emissions and a more diversified portfolio, albeit at different levels. Models in studies reviewed analyze alternative scenarios and show net job gains but these are based on assumptions that are very aggressive (e.g., relative to official forecasts) and unrealistic (e.g., relative to the current state of technology, existing set of energy and environmental policies, availability of factors of production including financing – capital, shortage of infrastructure, uncertainty about consumer adoption and so on).