‘Net-zero’: bad for UK jobs?

A recent think tank report that predicts significant disruption to jobs in the UK from the transition to net-zero emissions uses a potentially misleading method, argues Alex Bowen, whose own analysis shows that, with the right policies, the transition could benefit workers throughout the country.

Reducing carbon emissions in the UK to ‘net-zero’ by 2050 is a big challenge to citizens and policymakers, a challenge made evident by the UK government’s own work, the publications of the independent Climate Change Committee and numerous studies by academics and think tanks. One of the most recent think tank examples is a report titled ‘Getting to Zero’ by Onward, a self-described “powerful ideas factory for centre-right thinkers and leaders”.

The Onward report focuses on three key questions: how to decarbonise incumbent industries, the conditions for inventors and innovators to overcome constraints that currently limit our ability to act, and the labour market implications of net-zero.

One of Onward’s conclusions with respect to the labour market is that “The people and places who will face the most change are concentrated in the same places that have been politically volatile in recent years” and that “…many of these places were worst hit from the deindustrialisation of the 1980s and 1990s,” reinforcing the problem. This is an important point about net-zero and jobs, which demands policymakers’ attention. It recognises that achieving net-zero will not only affect jobs in the environmental goods and services sector, which accounts for only around 1 per cent of UK total employment according to the Office for National Statistics (ONS) and yet is sometimes treated as the only place where green jobs are being created.

The report looks at broad industry groups (the ‘Section’ level in the Standard Industrial Classification [SIC] used by the ONS) and counts all the jobs in those groups that account for at least 2% of UK emissions each as being the most affected. This is potentially misleading, in three ways.

First, if one drills down to the next level of disaggregation of industry groups (the two-digit level of the SIC), it becomes apparent that there is a lot of variation in emissions intensity within categories such as manufacturing.

For example, the manufacture of pharmaceuticals, computers, electronic and optical products entails about one-eighth or less of the emissions per unit of value added than does manufacturing as a whole. Some industries outside those designated as high emitters by the report are worse than many manufacturing sectors – services to buildings and landscape activities are more than twice as emissions-intensive as the repair and installation of machinery and equipment (which are counted as part of manufacturing). The biggest challenge faces the super-emitters such as agriculture and hunting, manufacture of basic metals, and electricity, gas, steam and air conditioning supply. It would be interesting to see if the geographical pattern of employment impacts identified by the report would differ significantly if industry data were disaggregated further.

Second, the statement in the report’s foreword that suggests there will be as many as 10 million high-emitting jobs disrupted by the transition to net-zero over the next three decades risks conflating ‘high-emitting jobs’ with ‘jobs in high-emitting industries.’ Jobs in renewable energy, electric vehicle production and insulation material production all fall within the categories of high-emitting industries but are likely to be in greater demand thanks to the transition to net-zero.

Third, and particularly important, the journey to net-zero may affect many job opportunities in relatively low-emitting industries, while leaving some jobs in high-emitting sectors relatively unaffected. In work with Professor Bob Hancké of the LSE, carried out for the European Commission, I looked at the proportion of ‘green’ occupations across industries (defined in the same broad way as in the Onward report). We used a categorisation based on US research on detailed job content, dividing green occupations into three types:

1. Green Increased Demand (Green ID) jobs: Existing jobs that are expected to be in high demand due to greening, but do not require significant changes in tasks, skills or knowledge. These jobs are considered as indirectly green because they support green economic activity but do not involve any specifically green tasks. (Example: bus drivers, counted in the occupational category ‘bus drivers, transit and intercity.’)
2. Green Enhanced Skills (Green ES) jobs: Existing jobs that require significant changes in tasks, skills and knowledge as a result of greening. (Example: electric vehicle electricians: counted in the occupational category ‘automotive speciality technicians.’)
3. Green New and Emerging (Green NE) jobs: Unique jobs (as defined by worker requirements) created to meet the new needs of the green economy. (Example: fuel cell engineers.)

Many of the jobs in these categories are likely to be subject to increases in demand or changes in job content but have not been affected yet. We found that 40% of EU employment in 2016 (among the population aged 15–64) fell into one or more of these broad categories, up from 35.5% in 2006.

The surprising finding was that some low-emitting industries had a higher proportion of people in (potentially) green occupations than did some high-emitting ones. For example, only a quarter of jobs in agriculture, forestry and fishing could be characterised as green jobs on our metric, while just over 50% of jobs in ‘Real estate activities; Professional, scientific and technical activities; and Administrative and support service activities’ were so classified.

There is a danger that the method used by the Onward report neglects the huge opportunities for job creation offered by the transition to net-zero outside the high-emitting sectors. This could be ‘disruptive’ in a good way – as long as (re-)training and education adapt accordingly.

Thus the journey to net-zero may involve a more pervasive change in the composition of jobs than even the Onward report envisages. A lot of this will be achieved by normal labour market turnover; typically, in the UK, nearly a quarter of workers in employment in a given year will not be in the same broad industry a year later. But more active labour market policies to retrain workers and find new jobs for those who find their skills obsolete will be needed – not only in areas with a high concentration of high-emitting industries but throughout the country. If such policies are intensified, the transition to net-zero, far from being bad for jobs, can benefit workers throughout the UK.