The long-term effect of renewable electricity on employment in the United Kingdom

Assessment of the employment impact of renewable electricity technologies is generally implemented through either complex and data-intensive methods (such as Computable General Equilibrium models) or simplistic approaches, normally focused on specific energy generation technologies, such as employment factors. In contrast, this article proposes a transparent and easily reproducible econometric methodology based on the Vector Error Correction model that uses aggregated and widely available data. The model is applied to the power generation sector in the United Kingdom using annual data from 1990 onwards and provides evidence that the long-term employment impact of renewable technologies is much higher than the impact arising from deploying nuclear or natural gas technologies. The impulse response function analysis indicates that a permanent 1 Gigawatt-hours increase in annual electricity supply generated by renewable technologies creates 3.5 jobs in the long-term period. Finally, this study derives the implications of the findings in the context of decarbonisation scenarios for the power sector in the United Kingdom and assesses the extent to which decarbonisation pathways based on renewable electricity contribute to stimulating employment in the generation sector.