Rafael Garaffa

The energy transition is reshaping the entire economy, producing significant changes in specific sectors. This transformation affects the demand for overall labour, skills, occupations, wages and working conditions. Estimating how many workers are needed to meet clean energy targets is a prerequisite for any successful action. We combine scenario analysis with multi-regional input–output tables to assess the effects on employment of deploying wind and solar power technologies in Europe. The results indicate that the additional installations of wind turbines and solar panels to deliver on the European Union (EU) Green Deal targets would require 130 000–145 000 additional skilled workers in the EU, with the investment in skills amounting to EUR 1.2 billion by 2030. Job creation varies across Member States, and those with relatively higher shares of renewable capacity currently installed may face lower re-training costs per worker in 2030. We also find that training and education in key sectors is currently lagging. The paper provides novel estimates on the additional amount of workforce required and the associated training costs for renewable power deployment at Member State level in 2030.

Climate policies shape inequalities through their effects on structural change via the source of income channel, and on household expenditures via the use of income channel. We compare the impact of carbon pricing on within-country inequalities when tax revenues are recycled through lump-sum transfers or labor tax cuts. We account for the impact of the labor share on inequalities, and compare results across regions with contrasted levels of development, using four macroeconomic integrated assessment models. We find that accounting for the source of income reduces the performance gap between labor tax cuts and lump-sum transfers. Also, carbon pricing with revenue recycling is compatible with reducing inequality, and can increase the consumption of the poorest quartile. We highlight the central role of labor income in shaping the distributional consequences of climate policy beyond consumption-side price effects. Our results suggest that sustaining the labor share can strengthen the progressivity of climate policies.

The European Union's goal to achieve climate neutrality by 2050 will lead to an economy-wide transformation that will also affect labour markets, particularly in sectors that are more directly impacted by the climate transition. Because of the expected sectoral shifts in employment, it is important to gain insight into the sectoral mobility of workers. Thus, this paper contains an exploratory and descriptive analysis of the labour force in the impacted sectors between 2010 and 2020, investigating certain demographic indicators that may be relevant for labour mobility, such as age and gender. Next, we combine this data with calculations on sector-to-sector transitions. The findings indicate that the transforming sectors collectively employed around 30% of the EU labour market in 2023, with a balanced representation of age groups comparable to the average across all sectors. However, the transforming sectors are male-dominated, with women making up a much smaller share of employment compared to the economy-wide average. We find that younger workers in all countries demonstrate higher mobility compared to older workers, with variation across EU Member States. In terms of transitions between individual transforming sectors, we find that these happen most frequently between manufacturing and construction (in both directions). There is also a net inflow of workers into all of the transforming sectors, except for mining and extraction.

Russia’s invasion of Ukraine has led to strong economic repercussions globally. In particular, turbulences on international energy markets and reduced flows of natural gas from Russia to the EU led to a sharp increase of natural gas prices. In this paper, we investigate the effect of higher gas prices on the European economy using the computable general equilibrium model JRC-GEM-E3. Numerical simulations quantify direct and indirect (via spillovers to electricity prices) implications for macro-economic outcomes, sectoral trade and employment, and distributional impacts across household income deciles. Results indicate that the (indirect) macro-economic impacts from electricity price changes induced by higher gas prices are larger than the (direct) impact of the gas price increase. Spatial heterogeneity in gas price impacts across regions globally leads to trade and competitiveness impacts, but has little influence on aggregate GDP impacts. The energy price shock is regressive, and results indicate strong employment impacts in particular sectors. Finally, the scenarios indicate that the macro-economic impact of the same energy price shock would be reduced by more than two thirds, if it were to occur in an economy that has decarbonised to achieve the EU’s 2030 climate targets. This illustrates that decarbonising the economy enhances the resilience to fossil fuel price increases.

Recent climate diplomacy efforts have resulted in Just Energy Transition Partnerships (JETPs) with South Africa, Indonesia and Vietnam, mobilizing financial support for ambitious decarbonization targets. Here, to assess JETPs’ alignment with global climate targets, we conduct a model-based assessment of JETPs’ energy and emissions targets. Results show greater alignment with a global 1.5 °C trajectory, indicating a promising route for international collaboration to keep Paris Agreement goals within reach.