FutureStructure

Job Creation Data for Green Projects Don’t Tell the Whole Story, Researchers Find

The American Council for an Energy-Efficient Economy is calling on researchers to consider the ways utility savings lead to job growth even after a project is done.

by / September 24, 2015

Green energy advocates might be holding themselves back by not considering the full economic impact of their environmentally friendly projects, the American Council for an Energy-Efficient Economy is arguing in a new study.

The organization published a study Tuesday in which it reviewed efforts to nail down estimates for the number of jobs that “green” spending creates. Of the 10 projects included in the study, only eight looked at what the study authors called the “implementation phase” impacts of energy-saving projects — mostly involving the jobs created at companies that perform installation work.

That information plays a big part in whether projects like that will get funding in the future.

“Utilities, third parties and governments collect information on energy-efficiency job creation to meet goals and mandates from diverse stakeholders, including policymakers, investors and program funders,” the study reads. “One of the key reasons is to attract and retain political and financial support for efficiency investments.”

The problem with only looking at direct job creation is that investments in green energy unlock a whole new area of job growth, the council argued in its report: the “savings phase.” Because the projects in question are designed to save the customer money on utility bills, the study authors argue that the customer then has more money to spend on other items. A company might hire new employees, or a homeowner might go out to dinner more often.

“If the owners of an owner-occupied office building upgrade their windows to more energy-efficient models and use the money they save on energy to make more of their product or service, any increases in employment that result are direct impacts of the savings phase,” the study reads. “The jobs created due to increased demand for office supplies, equipment and other inputs are the indirect impacts, and when the workers in the building and along the supply chain spend their increased income, those are induced impacts.”

But those numbers might be hard to measure accurately. If a family that’s saving on utility bills because of a new, energy-efficient water heater uses its extra money to go to a restaurant, it’s tough for an observer to see whether that trip to the restaurant really led to the establishment hiring a new server.

So instead of direct observation, the study authors instead are advocating for researchers to rely on modeling programs. One such resource is the IMPLAN Group, a company that several of the projects analyzed in the ACEEE study used to arrive at consumers' spending estimates and other guess-reliant conclusions.

Another problem is that different groups trying to estimate the economic impacts of a project will often use different definitions to gather data. Using a different definition for the word “job” might lead to higher or lower counts, for instance.

“Ultimately coordination and standardization are major keys to capturing the nonenergy benefits of energy efficiency and to ensuring their support and funding in the future,” the study reads.

Read the full study here.