Many industrial countries are pursuing so-called green energy policies, which typically imply the replacement of conventional fossil fuel power plants with renewable sources. Such a policy shift may affect employment in different ways. On the one hand, it could create new and additional “green jobs” in the renewables sector; on the other hand, it could crowd out employment in other sectors. An additional consideration is the potential increase in energy prices, which has the potential to stifle labor demand in energy-intensive sectors and reduce the purchasing power of private households.
A green energy policy creates more “green jobs” in renewable energy sectors.
A shift toward more renewable energy sources improves environmental quality by reducing emissions of ambient air pollutants, which is beneficial for health and labor productivity.
Subsidizing renewable energies by feed-in tariffs increases energy prices for firms and private households.
Rising energy prices put industrial jobs at risk when labor and energy are complementary inputs in industrial production.
Estimates of net employment effects are, though positive, small at best.