The cleantech sector is on the rise. Propelled by reduced production costs and the looming threat of climate change, demand for renewable energy and efficiency is increasing across the globe.
Sustainability is also becoming profitable. Market forces are expanding the cleantech sector at an unprecedented rate, as entrepreneurs and governments work together to upgrade energy grids with solar, wind, and hydro power.
Since at least 2012, these factors have quietly driven the growth of companies focused on producing renewable energy, efficient technologies, and electric vehicles. According to the International Renewable Energy Agency (IRENA), the global number of jobs in cleantech reached the impressive figure of 10.3 million in 2017. Growth in cleantech jobs means that an economy based on sustainable energy could soon gain political and financial support across the globe.
Where are the cleantech gains happening? Let’s take a deeper dive into the job growth numbers.
United States: Cleantech Sector Employs 4 Million People
In the United States, the cleantech sector hires about 4 million people for renewable energy, energy efficiency, and vehicle companies.
Renewable energy companies account for 777,000 jobs in the U.S. cleantech sector. Renewable energy companies are direct producers of alternative energy. Bioenergy producers are the largest employers in the United States. Solar energy producers are expected to grow over the coming years, but they are currently the second largest employers in the cleantech sector.
The job growth figures from the wind and solar sectors are impressive. From 2016 to 2017, solar jobs grew by 24.5 percent. During the same period, wind energy jobs grew by 16 percent.
While job contributions from renewable energy companies are significant, larger gains were realized by energy efficiency companies. Energy efficiency companies generally focus on new ways to conserve energy for things like appliances, automobiles, and energy grids. Energy efficiency companies hire engineers and scientists, so they have benefited from the recent push for STEM in universities.
According to EDF, 2.2 million people are currently employed by energy efficiency companies the United States.
Vehicle companies account for a relatively small but significant number of cleantech jobs. Companies like Ford and Chevrolet employ 174,000 people to produce advanced vehicles. 50 percent of these jobs are related to the production of hybrid electric vehicles.
Employment in the International Cleantech Sector
U.S. enterprises make large contributions to the development of the cleantech sector, but most job gains are based in other countries. The recent report by IRENA provides a helpful breakdown of job creation by country and by type of energy.
The number of cleantech jobs in 2017 was 5.3 percent higher than the equivalent jobs in 2016, indicating a gain of about 550,000 jobs. Most jobs are located in China, Brazil, India, the United States, Germany, and Japan.
60 percent of all cleantech jobs are in Asia. This trend is spurred by infrastructure-led economic development in China and India. China has contributed a large amount of its fiscal resources to develop an economy based on solar energy. The aim of the initiative is to produce jobs while improving public health. India has adopted a similar initiative, but their planners are also focusing on hydropower.
If there are no major setbacks, the cleantech sector could employ 28 million people by 2050. However, the future of China is uncertain; it is unclear whether Chinese investments and subsidies in cleantech are sustainable due to a growing deficit in China’s cleantech sector. If Chinese solar plants do not begin to offer economic returns soon, planners may be forced to reduce spending.
By Type of Energy
Solar PV firms play an increasingly important role in the global economy. These companies added 94 gigawatts to the global solar energy capacity in 2017. They also contributed 3.4 million jobs to the global economy. Meanwhile, the global wind energy sector created 1.15 million jobs.
The graph below provides an in-depth account of the growth in cleantech jobs in the global economy.
As the graph shows, solar PV has now outpaced bioenergy as the largest source of employment in the cleantech sector. Job gains in wind energy have remained relatively steady since 2014. Interestingly, jobs in the large hydropower sector have declined since 2013.
Causes of Cleantech Job Growth
The recent uptick in cleantech jobs is largely due to changing market conditions and government policies. Demand for electricity is growing in the developing world. This growth in demand coincides with high participation in international climate agreements, such as the Kyoto Protocol and the Paris Accords. When taken together, these factors lead to high governmental investment in renewable energy technologies.
Private enterprises are also involved in the cleantech sector to a much greater extent than ever before. The growth of a sustainable alternative energy market can be credited to falling renewable energy costs. Since 2010, the costs of solar and wind energy have fallen in North America. This is a result of more efficient producers and better functioning alternative energy markets.
Source: World Economic Forum
Will the Trend Continue?
Global cleantech jobs will continue to rise as more private enterprises and governments ramp up their efforts to combat climate change and pollution. This is good news for both workers and the environment.
As a source of jobs and good public health, the cleantech sector is supported by many governments across the globe. There are strong incentives to maintain momentum. China, India, and U.S. states like California have indicated this fact by establishing goals for carbon-free energy.
Unfortunately, most of the current growth of cleantech jobs across the globe depends on support from China’s government and private sectors. In 2017, China invested $126.6 billion in the cleantech sector, leading to more R&D and job growth. Many economists agree that China will not be able to continue these investments if the growing credit bubble tanks the Chinese economy. If the Chinese economy falters, the cleantech sector may need some short-term support from advanced economies like the United States. Under the Trump administration, such support seems unlikely.
Not all hope is lost though. Cleantech markets continue to expand as profit opportunities become available for entrepreneurs across the globe. The falling price of crude oil is pushing traditional fossil fuel investors to the cleantech sector. Falling solar energy production costs and higher demand will also boost private cleantech growth.
The near-term prospects are uncertain, but, barring any unseen factors, it seems that the long-term future of the cleantech sector is secure. Expect cleantech job growth to continue in the next decade.
Image courtesy of Flickr. Originally published by S&S on October 16, 2018.