Thursday 27th October 2016

The Myth of Green Jobs

Dr Gordon Hughes, a Professor of Economics at the University of Edinburgh was a senior adviser on energy and environmental policy at the World Bank until 2001. He has also advised governments on the design and implementation of environmental policies and was responsible for some of the World Bank’s most important environmental guidelines.

Dr Hughes recently published a paper entitled "The Myth of Green Jobs" that delves into the macroeconomic complexity faced by governments as they try (or do not try as is more often the case) to roll out policies to speed the transition to a low or no carbon future.

From the foreword by David Henderson...

In relation to climate change issues, there is an official policy consensus. The consensus is virtually world-wide, and has now been in place for over 20 years. The measures which reflect it have largely focused on ‘mitigation’ – that is, on curbing emissions of (so-called) ‘greenhouse gases’. Ambitious long-term targets have been set for ‘decarbonisation’ of economies, and an array of policies is already in place with more of the same in prospect. A transformation of world energy systems is envisaged.

The generally accepted rationale for these far-reaching actions is that they are necessary, or at any rate highly desirable, to avert the threat of dangerous global warming. Within this approach, it is admitted that the required mitigation measures involve higher costs, of energy in particular: in themselves, in isolation, they would make the world somewhat poorer. But the official policy consensus holds that these costs, while uncertain and possibly substantial, are known to be greatly outweighed (or overshadowed) by what would without them be the costs (or risks of disaster) from global warming. Mitigation policies, despite their costs, are thus seen to yield a clear net benefit to the world.

In recent years, however, a different way of thinking has emerged and gained ground. Within it, mitigation policies are seen as involving not just costs to be borne for reasons of prudence, but rather a new path to prosperity. ‘Green growth’ is put forward as the key to sustained economic progress and the creation of new jobs.

Gordon Hughes’s paper offers a powerful critique of this way of thinking, focusing chiefly on the claims made for job creation. He deals with the arguments on two different levels.

The first level is that of projects or programmes. Here he makes the fundamental point that in appraising these, prospective labour inputs are to be viewed as a cost not a benefit: labour costs should be counted as such, along with other inputs (such as energy). Hughes notes that if the objective of policy is to reduce CO2 emissions, the right course of action is to minimise the costs of any such reduction; and these include the costs of labour.

A second level is that of the economy as a whole – the possible macroeconomic effects of green energy policies. It is here in particular that green growth (and green energy) policies are now seen as intrinsically positive, through creating new opportunities for productivity-enhancing investments linked to a combination of rapid technological advances, higher energy efficiency, and expanding international markets.

As I read this paper, I find myself thinking aloud "if the answer is not nuclear then I don't think we have an answer at all". While I have my own concerns about the consequences of getting it wrong with nuclear power, I think we'd be better off spending our money to make it safe rather than throwing money into the wind (pun intended).