Energy efficiency investments and employment objectives

1. Energy efficiency investments and employment objectives Building retrofitting programs in Europe European Trade Union Institute

2. Peter J Glynn • Background • Australia • Labour relations • Labour law • Geneva • International LabourOrganisation • Present • Brussels • European Partners for the Environment • Vanuatu and PNG • Employment creation for nationals • Research, Bond University • Employment and workplace impacts of climate change policy; the role of employers organisations and trade unions European Trade Union Institute

3. Presentation outline • Investment in energy efficiency • Employment created by investments in energy efficiency retrofits • Labour market considerations European Trade Union Institute

4. Section 1: Investment in energy efficiency • Energy efficiency ranks at the lower end of sustainable energy invest opportunities • Energy efficiency could deliver 33% of GHG emission reductions • EU 20: 20: 20 climate and energy package (2007). Member states to: • Reduce emissions 20% below 1990 levels • 20% of energy to come from renewable sources • 20% reduction in energy production to come from energy efficiency measures By 2020 • EU energy efficiency action plan includes sectoral and energy performance requirements for a wide range of products, buildings and services and a comprehensive framework of directives and regulations. European Trade Union Institute

5. Financing energy efficiency investment • EU has comprehensive policy framework • more than 100 public financing mechanisms to promote energy efficiency in the building sector. • However, financing largely comes from public sector budgets • 4.25T euro investment in energy efficiency required if EU to meet it 2050 80% GHG reduction target • Public money should be used to leverage more private finance eg in Germany 8.9b euro promotional loans attracted 21.5b euro private sector investment European Trade Union Institute

6. Barriers constraining private investment • Costs are incurred in front of a long payback period • Multi dwelling housing where communal decision making is complex • Labour market is not aware or skilled • Retrofit theory in its infancy • Building owners rarely make energy efficiency retrofit a priority, unless mandated • Few businesses have prioritised or have the capital available • Uncertainty of government actions • Property owners are hesitant because retrofit debt appears as debt on balance sheet • Retrofitting is not core business of building occupants • Financial markets lack data to inform whether energy efficiency retrofit can pay for itself • Banks lack standards for collateralising debt European Trade Union Institute

7. Policy levers Governments have at their disposal a number of policy levers which, in consultation with industry can guide the transition, providing consistency and stability for private sector decision making and investment. These measures include: • building codes • technical and product standards • mandatory building labelling • fiscal incentives • tax reductions • energy efficiency obligations and • market mechanisms such as an emissions trading system (ILO 2011d). European Trade Union Institute

8. Effect of Recession on Retrofitting Investments • Investment has dropped in most countries • Construction and real estate sectors experienced largest falls in economic growth expectations • Large amounts of spare residential capacity • Little new construction or retrofitting Optional view: • Deeper retrofits lower risk of asset depreciation • Portfolio approach to managing building stock helps owners increase cost effectiveness of energy efficiency efforts • The scale of investment determines the speed of retrofitting European Trade Union Institute

9. Section 2: Employment effect European Trade Union Institute • The constructed environment • Global: • 100m people • Europe • EUR 562b, 15m people • 10% GDP • Emissions profile • 23% of CO2 emissions • Older building stock has poor thermal performance and higher frequency of excess cold • UK: 70% existing stock still in use in 2050, 40% built before 1985 • Nearly half of all energy consumed in buildings could be avoided with new energy efficient systems and equipment, yet retrofits are still not occurring in the scale required (World Economic Forum 2011).

10. Retrofitting programs in member states • Tend to cover private households, but in some countries public and industrial properties as well • Belgium, Czech Republic, Germany, Estonia, France, Ireland, Italy, Latvia, Lithuania, Hungary, Austria, Poland, Romania, Slovenia all have building retrofitting in place • Job creation may not be a primary aim, but the employment effects are positive European Trade Union Institute

11. European Trade Union Institute

12. France; Grenelle Plan-Batiment • Required that by 2012 all new buildings will be low power and by 2020 they will all be “positive energy” • The plan includes progressively scaling up capacity to renovate • 400,000 units in 2013 and • 800,000 houses using the most energy by 2020 (ADEME 2011). European Trade Union Institute

13. Germany Building Retrofit Program • Germany resolved to drive down energy consumption in buildings through installation of insulation, installing modern heat diffusion devices and installing technology to manage energy usage. Its target was to: • Renovate 300,000 apartments per year • Create/preserve 200,000 jobs • Reduce emissions by 2m tonnes per year • Reduce state debt $4b by reducing unemployment and increasing tax revenue • The initiative also saw the development of new technologies, positive effects were felt in towns and many new jobs were created (Syndex 2011). European Trade Union Institute

14. Germany Building Retrofit Program (Year 2010) • For every 1 euro of public funds on energy efficient construction and refurbishment, federal government received 5 euro tax revenue • 340,000 jobs created in the sector • 1.8b euro saved in welfare payments European Trade Union Institute

15. UK Green Deal Programme Improve energy efficiency in households and businesses at no up front costs, paying back through future savings in energy bills Domestic building responsible for 25% of all emissions and 40% of its final energy use. Over 75% of energy used in homes is for space and water heating Retrofit 23m dwellings to acceptable standards of energy efficiency, or “one building per minute to 2050” (DECC 2010) European Trade Union Institute

16. UK policy critique: Labour market impacts • Issues not adequately addressed in UK policy • ILO: • governments must have policy to manage this situation • OECD: • Labour and skills policies are important • Policy should focus on preserving employment, not jobs • Workers and firms must be able to adapt quickly • Gleeson: • New occupational profiles • New sources of labour required • ILO UK country study: • No centralised national framework • Skills and labour shortages acknowledged • Generalised statements rather than specific measures European Trade Union Institute

17. Section 3: Labour market impact • In respect of the construction sector it believed the new green jobs would be performed by people who come from the industry and were retrained (Eurofound 2011; Pauwels et.al. 2011) • Skills gaps and shortages would be a “binding constraint” on the constructed environment and that “the majority of architects and engineers worldwide are unaware of the materials, design and construction techniques available for energy efficient buildings and are therefore unable to put them into use in their projects” (UNEP 2008, p. 19). While one suspects that reference is probably now dated, the OECD (2011) suggests skill shortages are already a concern with construction and retrofitting among the most effected sectors. • ILO research attributes the problem to an underestimation of growth in the small and medium enterprise sectors, the general lack of scientists and engineers, national skills structures which don’t meet demand and the low reputation of some occupations (Strietska-Ilina et.al. 2011). European Trade Union Institute

18. Transitioning the labour market (1) European Trade Union Institute Research 1 (ILO 2011): • Skill shortages and new occupational profiles • Green building value chain occupational clusters: • Conceiving, planning, designing and advising: architects, consult engineers • Construction, installing, maintenance: specialist trades • Controlling :energy auditors, inspectors • Enabling: policy makers, urban planners • Manufacturing and distribution: manuf’s of green prod • Green building clients: developers, build managers

19. Transitioning the labour market (2) European Trade Union Institute Research 2 (Freidl 2011): the green plumber New requirements: new products, technological developments, understanding demanding customers, high level of flexibility, specialised knowledge New competencies: customer orientation, ability to communicate and decide, to consult and sell, planning competencies, a high level of independence and global thinking Existing competencies: professional competencies and manual skills.

20. Transitioning the labour market (3) European Trade Union Institute Research 3 (Gleeson et. al. 2011): The retrofit construction team: • competent emissions assessors, project managers and a supply chain capable of delivering mass retrofitting. • the project delivery for a retrofit delivering emission reductions will require a workforce to: • assess the emissions • carry out the options appraisal • project managers • skilled labour • monitor and report on final fuel emissions.

21. All policy is not good policy European Trade Union Institute • Cool-biz (Horie 2009) initiative in Japan • Increase office temperatures/reduce cooling • Changes working times and traditional formal office dress • Result • Loss of worker productive capacity • Stress and depression • Australian Home Insulation Programme (Combet 2010) • Insulate homes, train and employ low skilled workers • Electrocutions, four fatalities and 100’s of house fires

22. Key findings • Efforts need to double to meet EU energy efficiency goals by 2020 • Regulatory uncertainty is a barrier to pursuing energy efficiency investments • Up to 2.5m jobs (direct and indirect) could be created in the EU building sector by 2030 • Governments should leverage more private finance in their promotion of energy efficiency in buildings • Better energy efficiency performance data and putting a monetary valuation on the co-benefits to energy efficiency is required to attract large investors • A labour market plan is required • Social partners need to be involved • Transition should provide for decent work and a just transition European Trade Union Institute