June 30, 2020
Net-Zero Skills Gap needs urgent action
Professor Brian Sturgess

Transforming the British economy to achieve Net Zero by 2050 will need the spending of billions of pounds in new investment on a green infrastructure. What is less understood is that the structural transformation of the economy, particularly transport and buildings, to meet Net Zero will require not only capital spending on the housing stock and transport infrastructure, bigger in aggregate scale than in the power sector, but also massive spending on people, on what economists call human capital. A large proportion of the workforce will need retraining in new skills as many old occupations are phased out and to meet rising demand as many new jobs are created. Currently, there are predictions that between 400,000 to over a million new jobs will be needed by 2050 and these figures are probably underestimates. The provision of some of these skills will be market-driven, but the government must act now to ensure that the state directed education sector is prepared to play a major role to facilitate the necessary change especially in the aftermath of the Covid-19 crisis.

 

The investment that has already taken place in transforming the power sector will generate a high social rate of return for decades. Nevertheless, much more capital spending is needed to achieve Net Zero to generate much more electricity from solar and wind accompanied by the necessary storage capacity to ensure a safe, secure and balanced distribution network. This spending will be accompanied by accelerated write-offs of uneconomic capital employed in carbon-intensive activities. For the first time coal was not used in the generation of electricity in 2017 and the number of coal free power days has multiplied as renewable generation has increased its share.  The UK Government has confirmed it will close its remaining coal-fired power stations by 2025, although this may be brought forward to 2024. Structural change in a dynamic economy inevitably means the loss of value of sunk cost past investments – the process known as creative destruction. There are 45 gas fired power stations in Britain with over 50MW capacity, many of which were built during the ‘dash for gas’ in the 1990s and the transformation to Net Zero means the same fate awaits them and unfortunately the jobs dependent upon them.


The good news is that power generation is a capital-intensive activity and there has been a well-planned policy for investment in the sector which is largely on-course which minimises disruption in dependent labour markets. Data from the Department for Business Energy and Industrial Strategy (BEIS) demonstrate that the power sector’s emissions of greenhouse gasses in the UK fell by 67% between 2008 and 2019 and accounted for 12% of all emissions in 2019.  But there has been much less progress in other sectors towards Net Zero. Transport accounted for over a third of all emissions last year (surface, 24%, aviation 8% and shipping 3%) while industry accounted for 21%, buildings, commercial, domestic and institutional contributed a further 18% and agriculture 9%. Structural change in these sectors will have a much more disruptive impact on the labour force and writing off old skills comes at a far greater human cost than closing a redundant power station.

 

In its most recent progress report to Parliament in June the Committee on Climate Change (CCC) has highlighted the need for much needed investment in infrastructure investments and in a reskilling of workers to meet the Net Zero target. The CCC has urged the government to consider an expanded role for the education system to supporting the transition to a net-zero economy and to prepare for the risks of climate change and the need for adaptation to its negative effects. This must include engaging schools, universities and technical colleges to promote greater public awareness and understanding and to invest in the technical skills needed by the workforce. In particular, the CCC Department for Education and the Institute of Apprenticeships, along with BEIS, will need to consider how to build the skills in the workforce required to deliver a low-carbon housing stock.


With higher levels of unemployment and underemployment facing the economy as a result of the fall-out of COVID-19, a major retraining programme will not only reduce the human cost of job losses, but will equip workers with necessary skills to take advantage of the opportunities presented by the coming changes in the economy to move to Net Zero and to adapt for the inevitable consequences of climate change. As former Governor of the Bank of England, Mark Carney, has said it is impossible to self-isolate from rising global temperatures and all the resulting social and economic disruption.

 

Fortunately, many of the activities needed to transform the economy such as in future proofing the housing sector will be geographically diversified and labour intensive. New research published by the National Grid earlier this year estimated installing low-carbon heating in millions of homes and creating around 60,000 charging points to power eleven million electric vehicles would mean 400,000 new job opportunities by 2050 providing opportunities for skilled tradespeople, engineers and other specialists across all regions of the country. In June, the Local Government Association (LGA) in contrast predicted that nearly 700,000 new green jobs could be created by 2030 rising to more than 1.18 million by 2050. In a recent report “Local green jobs – accelerating a sustainable economic recovery” the LGA argues that the demand for green jobs could act to counter the unprecedented job losses due to coronavirus which are expected to rise when the furlough support scheme ends in October.

 

The LGA Report estimates that nearly half (46%) of the total low-carbon jobs needed by 2030 will be in clean electricity generation and providing low-carbon heat for homes and businesses, such as manufacturing wind turbines, installing solar panels and heat pumps. About a further fifth (21%) will be involved in installing energy efficiency products, such as insulation, lighting and control systems with a further 19% providing low-carbon services (financial, legal and IT) and producing alternative fuels, such as bioenergy and hydrogen. A further 14% of jobs will be directly involved in manufacturing low-emission vehicles and the associated infrastructure. In addition to these job opportunities Green Peace adds in a recent study that the nature emergency requires a UK-wide programme of recovery involving a properly funded programmes to plant at least 700 million trees by 2030 which would also support thousands of jobs, help lock in carbon and protect homes from flood risks.

 

The level of co-ordinated social action needed to meet the Covid-19 crisis has been unprecedented and last seen in wartime in Britain. The move towards using digital technology has kept the economy ticking over while carbon emissions have dropped as result of reduced economic activity. Economic growth will return and the recovery will be slow and painful with many jobs disappearing. Now is the time to launch a co-ordinated public education programme – (as was made on the dangers of the virus) – of the steps needed to tackle climate change and adapt the economy in schools, Universities, colleges and technical training centres. The government was tardy in its preparation for the pandemic it must now engage with all stakeholders in education, industry and local government to understand how new funding for new skills can be met to respond to Net Zero.

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