Are you sure?

Doubts about green energy's job-creation in Hungary

Green energy could provide jobs only while new, greener facilities are buing built, energy firms and analysts are saying. This means that if energy production becomes greener, it might employ fewer people.

Hungary is currently committed to reducing its greenhouse gas emissions by 20% from the 2005 benchmark and the related developments and investments are expected by the government to play a major role in its drive to create some 1 million jobs over the next 10 years. However, now that the deadlines are drawing closer, the sweeping conquest of renewable energy is becoming doubtful and some think that maybe it’s not even worth it.

“I wouldn’t overestimate the job-creating potential of renewable energy,” said Attila Chikán Jr, CEO of Alteo Energiaszolgáltató Nyrt. “Hungary’s commitment [to reduce emissions by more than the required EU minimum] is not something that would distinguish us in Europe, it’s necessary for us to stay in,” he said. The country’s renewables program is a “political necessity”, which is good this way since it’s the “right thing to do,” he added.

It appears that stopping global warming, important as it may be, is actually bad in terms of employment. Decommissioning older, fossil-based facilities will lead to massive layoffs. Even if the energy demand can be met with renewable alternatives, these technologies are far-less labor intensive, actually leaving unemployment higher than it was.

Environmentalist group Greenpeace has released a study indicating the benefits of going for not the required 20% but 30% in emission reduction. In the forecast, the 30% reduction target would bring a 10% leap in overall employment. However, these are mainly in the building-industry from residential and industrial retrofitting efforts that offset a lapse in other sectors, like mining or electricity and gas utility services. But once the retrofitting is done, these jobs will vanish adding to the industries that already saw jobs lost because of the green transition.

According to Attila Ságodi, partner at KPMG, the only way the emission drive and the related developments could become boosters of employment is if Hungary succeeds in becoming a major manufacturing supplier. “It can only happen if we are able to produce for exports and if we’re good enough,” he said.

Meanwhile, the market for fossil fuels is alive and well and is set to stay that way for the next few decades.

According to ExxonMobil’s Energy Outlook, global energy demand will to be about 35% higher in 2030 versus 2005, and demand in the developing nations will rise more than 70%. The company predicts wind, solar, and biofuels will grow sharply through 2030, at nearly 10% per year on average. However, because they are starting from a small base, their contribution by 2030 is likely to remain relatively small at about a minute 2.5% of total energy.

At the opposite end of the spectrum, US professors Mark Z Jacobson and Mark A Delucchi released a study in 2009 envisioning a scenario where 100% of all energy demand is covered by renewable sources, wind, water and solar. The strategy calculates a total spending requirement of $100 trillion over several decades.

“The capital costs will be paid for the way they are now, via a capital-recovery charge component in the price of energy. The sum almost certainly will not be $100 trillion over 20 years, because it is unlikely that the conversion will occur over 20 years – 40 to 50 years is most likely,” Delucchi elaborated to the BBJ in an earlier correspondence. He also expressed confidence that there would be willing investors around. “This project is not particularly risky, and there is no particular reason to imagine that capital per se will be short supply,” he said.

In ExxonMobil’s take, the fuel to gain most from cost-savings combined with a desire to reduce natural impact will be gas. “The forecasts show a shift toward natural gas as businesses and governments look for reliable, affordable and cleaner ways to meet energy needs,” Rex W Tillerson, chairman and CEO said. “Newly unlocked supplies of shale gas and other unconventional energy sources will be vital in meeting this demand,” he added.

 

Currently, the energy industry overall provides 25,500 jobs according to November 2010 information from the Central Statistical Office (KSH). Most of these jobs are in the non-renewable segment as renewable energy only makes up 7% of all generated power in Hungary (October 2010 data, Hungarian Energy Office).