The Scotsman printed a two page spread in the lead up to the Scottish election warning that the SNP’s target for 100% renewable electricity by 2020 would ‘wreak significant damage on the Scottish Labour market’, citing as evidence a report called ‘Worth The Candle?’ by Verso Economics, which concluded that for every job created in the renewable sector, 3.7 are destroyed elsewhere in the economy.
But this head-line grabbing statistic, which has been picked up at full tilt by nimbies and climate sceptics, deserves some closer scrutiny.
The authors, Tom Miers and Richard Marsh, arrive at their astonishing conclusion by totting up the financial support for the renewables industry (supposedly some £1.4bn), estimating how many jobs this sum of money could create if it was spent elsewhere in the economy (10,000, they claim), and then contrasting this with the number of jobs currently existing in the renewable sector (a measly 2,700, say Verso). Even at first glance this is a static analysis of a dynamic system, which fails to recognize the benefits that accrue from being a first mover in an emerging and competitive market. Miers’ ignorance of this reality is astounding: “If you build
up an industry on subsidies,” he writes, “almost by definition there will be no economic benefit.”
But this is just the beginning. Verso’s estimate of the number of the people currently employed in the renewables industry (2,700) is wildly out of step with other estimates in the field. For example, RenewableUK’s recent report ‘Working for a Green Britain’ found that there are four times as many people (10,800) employed in the wind, wave & tidal industries alone. Together these industries only account for 47% of the support given under the Renewables Obligation – meaning that the real number of jobs sustained by it is likely to be much higher. How did Verso get it so wrong? Well, RenewableUK reached their figure by surveying companies across the industry, asking them how many people they employed in various parts of their business. Verso, by contrast, simply took the ONS’s figure for the number of people employed by companies whose main business is electricity production and multiplied it by the proportion of electricity that we get from renewables.
One obvious pitfall of this approach is that different types of generation require different numbers of people (and several studies have shown that energy efficiency and renewables generate more jobs per KWh than fossil fuel and nuclear industries). But the more fundamental problem with Verso’s estimate is that they have completely misunderstood how the ONS’s statistics for the electricity industry work – specifically, that they only include those people directly working on a power plant; a figure of 25,000. In other words, the people employed delivering coal to Longannet powerstation won’t be included in that figure. Neither will the people who work on jack-up barges for offshore turbines, those who erect the turbines, or – most importantly – the people who maintain and repair them!
The credibility of the research crumbles further, when it emerges that Verso have included the exemption of renewables from the Climate Change Levy as a direct subsidy to the industry. Given that the Climate Change Levy is a tax designed explicitly to discourage the burning of carbon-intensive fossil fuels, and raise funds to plough into cleaner forms of energy, it would seem rather daft for it to apply to renewable energy.
As such the Verso Economics study both overestimates the level of financial support flowing into the renewables sector, and underestimates the jobs that are likely to be created in the sector. But a far greater flaw in the analysis is that it completely ignores the wider costs and benefits associated with our energy choices.
What, for example, will be the cost of allowing climate change to spiral out of human control? Of rebuilding homes and buildings after ever more frequent storms and floods? What will be the cost of treating respiratory diseases caused by opencast coal mining; of cleaning up the oil spills from ever-riskier deep sea oil wells; providing clean water to families when toxic chemicals from the gas fracking process leach into our water table? What will be the cost to the economy of remaining hopelessly vulnerable to fossil fuels price-rises and shortages, and of falling behind in the fast-moving and competitive market for low carbon power?
Fortunately, Verso’s back-of-the-envelope calculations are wrong about jobs. But decisions about the direction of our energy system should not, in any case, be made on the basis of such crude, narrowly focused and short-sighted cost-benefit analyses. Afterall, how do you put a price on human life? Or the extinction of a species? On the hardship that will be suffered by hundreds of thousands of people displaced by the droughts, floods and resource conflicts that climate change will excacerbate?
As well as being a shoddy piece of research, the Verso study makes the fundamental error of assuming that we have a credible choice about whether or not to embrace renewable energy. From the perspective of long term energy security and social justice it is the only choice.