Green Jobs? Economic impacts of renewable energy in Germany

The positive impacts of an increasing share of renewable energy (RE) on the mitigation of climate change as well as on the decrease of the dependence of energy imports are indisputable. However, such are currently still the additional costs of heat and electricity generation from most renewable energy sources (RES). For a stable economic development, the overall balance of positive and negative effects under different possible future development pathways of fossil fuel prices, global climate policies and global trade is of interest. To account for all effects in a consistent framework, a macroeconometric model is employed. Economic development is measured via the comparison of economic indicators such as GDP and employment from different simulation runs. Overall net positive effects can be seen for instance as higher employment in one simulation run compared with the other. The environmental macroeconometric model PANTA RHEI is at the core of our methodological approach. PANTA RHEI is an environmentally extended version of the macro-econometric simulation and forecasting model INFORGE. It is based on official statistics and consistently describes inter-industry flows between 59 sectors. It includes consumption, government, investment, construction, inventory and exports as well as prices, wages, labor compensation, profits, taxes, etc. on the sectoral and macroeconomic level. The behavioral equations reflect bounded rationality rather than optimizing behavior of agents. All parameters are estimated econometrically from time series data (1991 – 2008). Producer prices are the result of mark-up calculations of firms. Output decisions follow observable historic developments, including observed inefficiencies rather than optimal choices. The energy module captures the dependence between economic development, energy input and CO2 emissions. It contains the full energy balance with primary energy input, transformation and final energy consumption for 20 energy consumption sectors, 27 fossil energy carriers and the satellite balance for renewable energy. The energy module is fully integrated into the economic part of the model. To examine the economic effects of increasing shares of renewable energy in Germany our analysis applies PANTA RHEI to a set of scenarios and compares the resulting economic quantities. The economic impact of an activity such as the expansion of renewable energy is assessed by comparing a simulation without the activity or economic policy measure with a simulation that includes the activity. A zero-RE scenario based on a low price path is compared to a development with differing degrees of domestic investment in RE and differing export trends based on the same price path. The comparison of simulation results shows macroeconomic effects such as net employment effects which can be traced back to the different scenario assumptions. The increase of renewable energy leads in most of the scenarios studied to positive net employment, rising steadily, particularly from 2020 onwards. The net effects are negative in the scenarios with minimal exports (i.e. remaining constant at today’s level), although this should be seen here more as a notional lower limit. In this case, for two expansion paths lower values for employment are observed by comparison with the zero scenario. However, at the end of the observation period there is a reversal in these cases: net employment effects become slightly positive or are neutral. The influence of exports on the domestic employment level also becomes very evident in the scenarios studied: using the optimistic expectations, the positive net employment effect rises by 2030 to values in excess of 150,000. Sensitivity analysis and critical discussion of these results is provided in the full paper.