Renewable energy and jobs: Annual review 2023

We are pleased to present this edition of IRENA’s Renewable energy and jobs: Annual review, the tenth in the series and the third produced in collaboration with the International Labour Organization (ILO). The report embodies the intersection of our agencies’ respective mandates – namely the energy transition and decent work for social justice – and discusses key opportunities and challenges for workers, employers, communities and public policy makers.

This year’s report finds that renewable energy employment worldwide has continued to expand – to an estimated 13.7 million direct and indirect jobs in 2022. We can expect the creation of many millions of additional jobs in the coming years and decades, provided that education and skills development programmes are appropriately expanded, workforce development programmes are put in place, and labour markets respond to evolving needs.

Nevertheless, challenges abound. Today’s renewable energy jobs are concentrated in a relatively small number of countries, reflecting the uneven geographic footprint of equipment manufacturing and capacity installations. The detail and quality of available data varies among countries and between the different renewable energy technologies, and information on job quality and workforce diversity remains sparse. Yet, with each edition of this series, we shed more light on these aspects.

Renewable energy and other energy transition technologies are attracting growing investment; but even as spending rises and installations expand, new challenges emerge. Climate change, technological advances, shifts in demographics and the global economic outlook, as well as other key developments may bring about adverse effects for employment. While each country rightfully aspires to derive socio-economic benefits from the energy transition, global solidarity is vital, as humanity confronts not only rising dangers from climate change but also deep social and economic divides.

The energy transition requires urgent collective action to reduce reliance on fossil fuels and towards clean energy; but it also must ensure that all persons have access to basic human needs and security of modern energy. We call upon policy makers to ensure that the uncertainties and disruptions inherent in the transition are minimised, and that efforts are made to close social protection gaps in the transformation process.

This year, in June, the International Labour Conference reaffirmed the urgency of action to advance a just transition to achieve social justice, decent work and poverty eradication, and to tackle environmental and climate change. During discussions, representatives of governments, workers and employers endorsed the 2015 Guidelines for a Just Transition as the central reference for policy making and basis for action.

It is critical that new jobs provide adequate wages and high standards of occupational safety and health. Fundamental principles and rights at work must be upheld and workers’ voices heard. It is essential that communities whose livelihoods now depend on fossil fuels be offered a stake in the new energy system through retraining and economic revitalisation strategies, wherever feasible. It is also vital that women have equal access to training and career paths in an industry that historically has been heavily male-dominated; that jobs be created for youth in the renewable energy sector; and that ethnic minorities and other vulnerable communities be welcomed into a workforce that reflects the diverse spectrum of modern societies.

This will not only enable the renewable energy industry to tap a much wider pool of human talent, thus minimising or avoiding future skill gaps; it will also advance the goal of creating a more fair, equitable and truly sustainable world. There is much to do, but we are enthusiastic and confident that we can achieve these aspirations.

This edition of Renewable Energy and Jobs marks the 10th anniversary of the series. It is also the final one produced under my guidance, with a dedicated and talented team. The idea for this series dates back to the early years of IRENA. From the very beginning, we insisted that the energy transition is a complex undertaking that needs to be approached not only from a technological angle, but from a holistic perspective that examines the socioeconomic dimension and analyses the array of policies needed for generating value along the supply chain and creating a skilled workforce.

When the agency was founded in 2009, information on the employment impacts of renewable energy was extremely scarce and mostly of an anecdotal nature. The jobs dimension was hardly in the public eye. Accordingly, the initial editions of our report were focused on identifying and marshaling existing data sources and supplementing them with our own calculations and estimates. Over time, we were able to close many gaps, and provide greater breadth and depth of coverage. We are proud that our work has brought greater visibility to this dimension of the energy transition – and stirred growing interest, which has led to more and better data becoming available.

Exciting work remains to be done. Over the years our focus has broadened to encompass qualitative employment aspects, workforce diversity, and the requirements of a just transition. The jobs review series is now part of a staple of IRENA reports on the socioeconomics of renewables and the energy transition. They include analyses of the gender perspective and assessments of opportunities for countries to leverage and enhance their local capacities. And in addition to our work on current renewable energy jobs, our socioeconomic modeling of energy transition pathways to 2030 and 2050 sketches how employment could expand in the future, with the right level of policy ambition in place.

I forge ahead in my career with the firm belief that IRENA has significantly broadened the horizon of many in the energy world. As I bid farewell to the Agency, I am confident that both my current team and those joining in the future will persistently prioritise placing people at the heart of the ongoing energy transition – and that the world will follow suit.

 

Under the guidance of Rabia Ferroukhi, this report was authored by Michael Renner, Celia García-Baños and Arslan Khalid (IRENA). Hydropower jobs estimates are based on statistics provided by Dennis Akande (IRENA) and modelling contributed by Maximilian Banning (GWS). IRENA expresses gratitude for valuable contributions (Chapter 4) made by colleagues at the ILO, including Camila Pereira Rego Meireles, Casper Edmonds, Jose Luis Viveros Añorve and Moustapha Kamal Gueye, as well as Diana Junquera Curiel (IndustriALL). The authors also thank Divyam Nagpal (IRENA), IRENA national focal points for country data and Renata Grisoli (UNDP) for data on Brazil’s bioethanol workforce.

For further information or to provide feedback, go to publications@irena.org.

Download from www.irena.org/publications.

Renewable energy development not only changes the mix of energy sources powering the world’s economies, but also creates jobs, builds economic value and enhances human wellbeing. The IRENA Renewable energy and jobs series quantifies current employment in the sector, examining different renewable energy technologies worldwide and in selected individual countries. The analysis considers a variety of public and private sector policy contexts, including those related to deployment, industrial policy, skill building, labour market measures and others. While available qualitative information about renewable energy jobs, such as education, skill requirements or workforce attributes, remains limited, the series asserts that decent jobs are a must for the energy transition.

This is the tenth edition of the series, and the third produced in collaboration with the International Labour Organization. Following an initial standalone report in 2013, IRENA launched this series to provide regular updates to its assessment of renewable energy employment worldwide. Each edition discusses the latest available data and highlights specific aspects, such as employment in the energy access context, the gender equity dimension or the requirements of a just transition.

The series is part of IRENA’s extensive analytical work, ongoing since 2011, on the socioeconomic impacts of a renewables-based energy transition, including employment creation; leveraging of domestic capacities along the renewable energy value chain; women’s participation in the renewable energy sector within the context of creating a diverse workforce; education and training opportunities; and the modelling of energy transition pathways to 2050 with regard to jobs, gross domestic product and a broad measure of welfare. This work is highlighted on the Energy and Jobs webpage.

The publications and IRENA’s comprehensive research on socio-economic impacts – all of which is showcased on the back cover – can be accessed by visiting www.irena.org/Publications.

This section presents employment estimates for solar photovoltaic (PV), wind, hydropower and liquid biofuels. Other renewable energy technologies, included in Figure 2 employ fewer people, and the information available on them is typically less detailed. For any given technology, equipment manufacturing, construction and installation, and operation and maintenance (O&M) are the main value chain segments, besides a range of support services.

Yet another record was set in 2022 – with the addition of 191.4 GW of solar PV capacity worldwide, up from 141.2 GW in 2021. China accounted for 45% of these installations, or 86 GW, and was followed by the United States, India and Brazil. The Netherlands, Germany, Japan, Spain, Australia and the Republic of Korea rounded out the top ten (IRENA, 2023b).

China is home to the vast majority of global solar PV manufacturing, supported by comprehensive industrial policies. The country retains a commanding position across the supply chain, from ingots and wafers to cells and modules. Southeast Asia has become an important, but much smaller, production and export hub, whereas the rest of the world has a marginal share in the supply chain.

Europe’s PV imports surged during the first half of 2022 due to the Ukraine crisis and subsequent efforts to reduce reliance on oil and gas imports. However, installation rates trailed due to shortages of inverters and skilled labour, which subsequently slowed imports during the second half of the year. India’s module imports declined significantly after the first quarter of 2022 once its basic customs duty took effect. In Brazil, a rush of installations was triggered by an impending law imposing a grid fee on small-scale distributed projects (Chen, 2023).

According to the United States (US) Department of Energy (US DOE, 2022), 1 GW of production capacity (for crystalline silicon [c-Si] modules, which account for about 90% of all manufactured modules) could generate anywhere from 1 085 jobs to 2 020 direct jobs across the full value chain.

IRENA estimates global solar PV employment at 4.9 million in 2022, up from about 4.3 million in 2021. Of the ten leading countries shown in Figure 3, four are in Asia, two are in the Americas and three are in Europe. Together, the top ten accounted for almost 4.1 million jobs, or 85% of the global total. Asian countries host 73% of the world’s PV jobs, reflecting the region’s continued dominance of manufacturing and strong presence in installations. The remaining jobs were in the Americas (11.5% of all jobs), Europe (11%; with European Union [EU] member states accounting for 10.6%) and the rest of the world (4.8%).

Figure 3 Solar photovoltaic employment in 2022: Top ten countries

China accounted for about 56% of PV employment worldwide, or some 2.76 million jobs. Employment in PV in the United States reached 264 000 jobs in 2022. PV employment in Europe was estimated at 540 000 in 2022 of which 517 000 jobs were in EU Member States. India’s total solar jobs are estimated to be at 281 400. On-grid solar is estimated to have generated 201 400 jobs, with another 80 600 in off-grid settings. Increasing solar PV installations in Brazil boosted employment in this industry to 241 000 jobs. Japan added less capacity in 2021 than the previous year. IRENA estimates its workforce at 127 000. Women’s representation is higher in the workforce for solar PV than for other renewable energy technologies (see Box 1).

In 2022, the wind energy sector installed 74.6 GW of capacity, 19% below the previous year’s and 33% slower than the record pace in 2020. Except for Sweden and France, new capacity additions in all leading countries were below that in the peak year. China retained the lead with close to half of global additions, far ahead of the United States, Brazil, the United Kingdom, Sweden, Türkiye, Germany, India, France and Spain (IRENA, 2023b).

Global employment in onshore and offshore wind remained steady at 1.4 million jobs in 2022. Wind employment was concentrated in a relatively small number of countries. China alone accounted for 48% of the global total, followed by Asia (representing 55%), Europe (representing 29%), the Americas (representing 16%) and Africa and Oceania (representing 0.7%). The top ten countries shown in Figure 5 together employed 1.23 million people. Four of these are in Europe, four in Asia and two in the Americas. The recent phenomenon of rising costs of inputs has led original equipment manufacturers to reinforce efforts to outsource some component production to low-wage countries. This will contribute to changing the industry’s geographic make-up.

On average, installation of 1 GW of onshore wind capacity could create 130 000 jobs in development, construction and installation over a five-year period and 12 000 jobs annually during the 25-year O&M phase (GWEC, 2022). Meanwhile, the greater complexity of components like foundations, substations, cables and installation vessels creates higher labour requirements for offshore wind farms than onshore installations.

Figure 5 Wind employment in 2022: Top ten countries

Hydropower remains at the forefront of the renewable energy landscape, boasting a global capacity surpassing 1 255 GW as of 2022. This figure translates to an impressive 37% of the global total renewable energy capacity. Total installed hydropower capacity exceeds that of wind and solar PV, although annual additions are much smaller now – some 20.5 GW in 2022. As shown in Figure 6, China, Brazil, Canada and the United States are among the key actors in this sector (IRENA, 2023b).

To assess job numbers in hydropower, IRENA uses an employment-factor approach coupled with national-level data for select countries. Considering data revisions since the previous edition of the Annual Review, the latest report estimates that about 2.49 million individuals were directly employed in the sector in 2022, 2.3% more than in the previous year. Consistent with earlier findings, O&M represent two-thirds of the direct jobs, 30% of the jobs are related to construction and installation activities, and about 6% are in component manufacturing. The remaining fraction pertains to O&M services, which represent the smallest proportion of the workforce. China continues to dominate in hydropower employment with a 35% share of the global total. India (second to China with a 19% share), followed by Brazil, Viet Nam and Pakistan, are among the top five (see Figure 7).

Figure 6 Hydropower capacity in the top ten countries, 2022

Figure 7 Hydropower employment (direct jobs), by country, 2022

A total of 162 billion litres of liquid biofuels were produced globally in 2021 (returning to 2019 levels after a decline in 2020, with bioethanol contributing 106 billion litres, biodiesel about 46 billion litres and hydrotreated vegetable oil [renewable diesel] adding close to 10 billion litres) (REN21, 2023).

According to preliminary estimates by the US Department of Agriculture’s Foreign Agricultural Service (USDA-FAS), output among the world’s leading biofuel producers was up slightly in 2022. As in earlier years, the United States, Brazil and the European Union were the dominant ethanol producers. EU members led in biodiesel production, followed by Indonesia, Brazil and the United States.

IRENA estimates worldwide biofuel employment in 2022 at 2.5 million, mostly in feedstock operations. Latin America accounts for 42% of all biofuel jobs worldwide, while Asia (principally Southeast Asia) accounts for 37%. The more mechanised agricultural sectors of North America and Europe represent smaller employment shares (15% and 6%, respectively). The top ten countries together account for about 94% of global estimated employment (Figure 8).

Figure 8 Liquid biofuels employment in 2022: Top ten countries

In the United States, 360 000 people were required for direct and indirect labour in biofuel feedstock and processing operations in 2022. In the 27 EU Member States, biofuel created an estimated 148 300 jobs in 2021 (up from 141 600 jobs in 2020) (EurObserv’ER, 2023). Total biofuels production in the European Union was relatively unchanged in 2022 (USDA-FAS, 2022e). Employment, therefore, may also be assumed to have remained at the 2021 level.

Many countries have labour-intensive feedstock operations, with informal and seasonal employment in the agricultural supply chain. Brazil remains the world’s largest employer in liquid-biofuel-related operations (about 856 000 jobs), and is second only to the United States in biofuel production. Other countries estimated to have sizeable biofuel workforces include Indonesia (619 000), Colombia (186 700), Thailand (97 100), Malaysia (66 600) and the Philippines (44 900).

As Figure 2 indicates, other renewable energy technologies employ far fewer people than solar PV, wind, hydropower and biofuels. The industries that manufacture and install these technologies are far less dynamic. For most of them the available information about their employment impacts is relatively scarce. Assessments for employment impacts of heat pumps, for example, are available only for some countries. Box 2 provides a summary of available information.

Following the COVID-19–induced activity slump in 2020 (when just 340 megawatts [MW] were installed), the off-grid sector rebounded, adding 690 MW of new capacity in 2021 and 1 400 MW in 2022 (IRENA, 2023b). Among various emerging technologies, decentralised renewable energy has emerged as a viable solution to provide reliable and clean power to communities, especially in remote areas. Beyond the environmental benefits, this decentralised approach creates local jobs and excellent opportunities for promoting diversity. This section discusses job and livelihood implications for mini-grids (often based on solar PV), small-scale hydropower and clean cooking solutions.

1.6.1 Mini-grids

Mini-grids will play an increasingly important role in closing existing gaps in energy access, especially in remote rural areas. In 2010, there were about 500 mini-grid installations in Sub-Saharan Africa. While the number has risen significantly, to over 3 000 installations at present, further acceleration is needed. According to one estimate, more than 160 000 mini-grids are required to address access needs (World Bank, 2023).

Kenya features prominently in the region, having deployed a significant share of Africa’s mini-grids. The International Labour Organization has undertaken an assessment of the employment impacts of the EU-funded Green Mini-Grid (GMG) Facility Programme in Kenya, which consists of 33 sites, principally solar PV based. For a typical mini-grid, the study (Oyuma, Game and Lieuw-Kie-Song, 2023) assumes that the design and feasibility phase takes one month of work and the construction phase takes another month, engaging, respectively, 7 and 104 workers. This translates into 0.7 and 8.8 fulltime equivalent (FTE) jobs, respectively, for a total of 9.5 FTE jobs, nearly all held by men. Most of the jobs are unskilled; almost half of the construction phase jobs pay an average daily wage of KES 500 (USD 4.69), ⁵ compared with KES 1 600 (USD 15.025) for wiring work, and KES 2 700 (USD 25.355) for field engineers and household mappers, for example. For O&M, the study estimates an additional 2.8 FTE jobs. For the 33 sites under GMG, the study also estimated indirect and induced employment at 652 jobs (these are not necessarily FTE jobs) in agriculture, manufacturing and services. Women account for about 20% of the total.

Based on average investment costs of EUR 195 275 per site and costs per connection of EUR 688, the study estimated that for every EUR 1 million invested, 58 FTE jobs could be created annually. Table 1 summarises key findings pertaining to direct jobs at present and direct jobs if future mini-grid targets are realised.

Table 1 Direct jobs in Kenyan mini-grid development

1.6.2 Small-scale hydropower

Small-scale hydropower systems offer numerous benefits for local communities and the environment. They not only provide electricity but could also support irrigation services and connect communities to the central grid. They also make it possible to sell excess power, creating opportunities for additional income generation. In this way, they help transform local economies and generate inclusive growth by empowering rural women to participate in these activities. Further, community-based hydro mini-grids incentivise local communities to restore and maintain surrounding watersheds, contributing to environmental sustainability.

The implementation value chain of small-scale hydropower offers plenty of local job opportunities. Jobs can be created due to feasibility studies, planning and procurement, and equipment manufacturing, to installation and connection, O&M, and eventually, decommissioning.

According to IRENA’s latest Leveraging local capacity analysis (IRENA, 2023c), a small-scale hydropower plant requires substantial labour to implement. For instance, a pico hydro plant (averaging 5 kW) requires over 17 000 person-days, a micro hydro facility (50 kW) requires approximately 64 000 person-days and a mini hydro system (500 kW) requires more than 160 000 persondays. ⁶ Among all value chain segments for a system, the majority of labour is needed for O&M work over the system’s lifetime. This O&M work accounts for 94%, 87% and 78% of total person-days for pico, micro and mini hydro, respectively (see Figure 10).

Figure 10 Distribution of labour required along the value chain for pico, micro and mini hydro plants

The above work mostly requires low to moderate technical skills (see Figure 11), which are typically readily available in a country’s workforce or can be developed through certification programmes or vocational training centres. By employing local talent, small-scale hydropower projects contribute to local capacity development and skill enhancement.

Connecting renewable energy supply with income-generating activities, known as productive end uses, has the potential to boost productivity, increase incomes, create local employment and catalyse rural economies. However, translating energy access into livelihood improvements requires investing in a social ecosystem that fosters technology solutions tailored to the specific needs of local communities. This investment should include financing, capacity and skill training, market access and cross-sector policy support to fully realise the benefits of decentralised renewable energy solutions.

The hardware required for small-scale hydropower can be manufactured locally. This creates opportunities for local skill building and fostering enterprise development. However, costly international standards often hinder local developers from competing for projects. Donor-funded international programmes must encourage the involvement of local experts instead of relying solely on foreign service providers. Full realisation of small-scale hydropower’s benefits and maximum domestic value creation require policies and measures to prioritise community capacity enhancement along the value chain and the promotion of social acceptance.

As the sector continues to grow, the demand for skilled workers in installation, maintenance, entrepreneurship and community engagement will increase. The expansion of the decentralised renewable energy job market has a positive multiplier effect, benefiting local economies, reducing poverty and fostering social development.

1.6.3 Renewables-based cooking solutions

Achieving universal access to clean cooking solutions is a pressing global challenge. Traditional cooking methods, such as open fires and inefficient stoves, not only contribute to indoor air pollution but also have severe health, environmental and socio-economic implications. Renewables-based clean cooking solutions, including bioethanol-based, biogas-based, electricity-driven and modern biomass-based solutions, present a significant opportunity to accelerate progress towards Sustainable Development Goal 7 and offer substantial job opportunities.

Studies show that countries such as Kenya had about 700 FTE jobs in the bioethanol sector in 2019, while the biogas sector employed 800 people and the electric cooking sector employed 200 (Lee et al., 2021). The potential for an increase in jobs numbers in the clean cooking sector is substantial if renewable-based solutions were to replace liquid petroleum gas. Currently, the sector, including liquid petroleum gas, is estimated to provide approximately 19 000 direct, formal jobs. There is also potential for 15 000–35 000 direct but informal jobs. Viet Nam’s biogas programme deployed over 180 000 biodigesters between 2003 and 2020, creating 2 500 jobs in the construction and services sectors (SNV and EnDev, 2021). Training and skill development is a critical element of local job creation in the clean cooking sector, which involves manufacturers, installers and O&M providers, as well as smallholder farmers where feedstock is needed (e.g. bioethanol supply chains) (IRENA, 2023d).

Lee et al. (2021) also showed that women’s involvement in the sector is limited, representing only about 20% of the non-managerial workforce, due to the physically demanding nature of these jobs. However, there are more women managers in the clean cooking sector. For biogas-based solutions, about one-third of managers are women, a share that rises to one-half for bioethanol-based and electricity-powered cooking solutions. According to the study, companies typically express a strong desire to involve women in managerial roles and in the research and development of products. The clean cooking sector thus presents a unique opportunity to bridge both the skill and gender gap (Lee et al., 2021).

While this annual review primarily focuses on the renewable energy sector itself, several closely intertwined solutions of escalating significance significantly contribute to the emergence of job opportunities or the dynamics of the employment market and its requirements. Among them, energy efficiency measures represent a pivotal facet. Further, the development of grid transmission and distribution networks will be crucial in unfolding the energy transition, as is true for flexibility innovations, energy storage and hydrogen technologies, among others.

The shift towards sustainable energy sources fosters increased economic engagement and redirects financial endeavours from fossil fuels towards sectors involved in the energy transition. IRENA’s World Energy Transitions Outlook presents a 1.5^°C-compatible trajectory that is consistent with the Paris Agreement on Climate Change. The macroeconometric modelling framework underlying IRENA’s 1.5^°C pathway captures the effects of and feedback loops for different climate and energy transition policies, including their impacts on government revenue streams, spending, and distributional and social impacts. The 2022 edition of the Outlook indicated that if the world follows IRENA’s 1.5^°C pathway, employment in the energy sector could grow to 139 million jobs by 2030, with renewables accounting for 38.2 million and other energy transition technologies for 74.2 million (IRENA, 2022b).

These numbers are derived from socio-economic modelling of IRENA’s 1.5^°C scenario, which represents a complex set of investments and policies that can drive the needed change in the energy sector. However, IRENA’s work has consistently emphasised that the transition has socio-economic effects (GDP, employment, and social welfare) far beyond the energy sector, across the economy at large. These impacts are shaped by an array of policies, and it is critical that outcomes maximise benefits for people while minimising uncertainties and adjustment burdens. Some of the key policies include carbon pricing, fossil fuel subsidy reduction, higher government spending on social infrastructures, and international collaboration. The forthcoming volume 2 of World Energy Transitions Outlook 2023, also explores the impacts of channeling revenues from wealth taxes towards social investments, and presents the impact of fair wages to workers in mineral mining industries in developing or emerging economies (IRENA 2023a, forthcoming).

As the global transition gains momentum, it becomes increasingly evident that governments need to proactively establish robust policies to foster the widespread implementation and seamless integration of renewable technologies. Prioritising the cultivation of a skilled workforce remains imperative, alongside a growing emphasis on the calibre of these employment positions. Further, it is critical that policy makers conceive an overarching framework that encompasses a spectrum of measures, including industrial strategies, labour market policies, social safety nets and initiates for promoting diversity and inclusivity (see Section 4).

Moreover, the landscape of labour is undergoing a paradigm shift as automation increases in the manufacturing sector. This transformation is recalibrating employment dynamics, reducing traditional workforce dependencies while simultaneously generating demand for the skill sets required to program and operate automated systems. While this transition might entail job displacements, the positions that emerge from it are anticipated to be of higher quality, demanding advanced skills. Ensuring low-income individuals' access to these roles should be a top priority.

Meeting the human resource capacity challenge to fill these energy-transition-related roles requires a robust scaling up of education and training programmes. It also calls for strategic measures to cultivate an inclusive and gender-balanced transition workforce. By embracing these multi-faceted approaches, the energy transition can accelerate the move to a more equitable and empowered workforce.

This section discusses employment estimates across several countries. As in previous editions, the principal focus is on countries leading in equipment manufacturing and installation – China, Brazil, India, the United States and the EU members. These countries are highlighted in Figure 12, with more detailed data in Table 2. Later, the section discusses a few other countries. Overall, the bulk of renewable energy employment is in Asian countries, which accounted for 62% of all jobs in 2022. While geopolitics and restrictive trade policies are increasingly influencing policy making on the production and deployment of renewable energy equipment, the jobs landscape is also affected by corporate decision making on production hubs and outsourcing.

Table 2 Estimated direct and indirect jobs in renewable energy worldwide, by industry, 2021-2022 (in thousands)

Equipment manufacturing for the solar photovoltaic (PV) and wind energy industries is highly concentrated in a few countries, as is much of the associated employment. However, these structures are in a state of flux due to corporate policies seeking locations with low labour costs for factories and government policies trying to localise or re-localise manufacturing operations. This section discusses the current geography of solar PV and wind equipment manufacturing and sketches recent industrial policy initiatives in several countries, which may change the geography of renewable energy employment.

Global annual solar PV module production has multiplied 38-fold over the past 15 years, growing from 7.2 GW in 2008 to 271 GW in 2022. Production jumped from 193 GW to 271 GW in 2022 alone. Meanwhile, it is worth noting that a large portion of capacity sits idle; less than half has been utilised in recent years, down from as much as 83% in 2017 (Wood Mackenzie, 2023a).

Even more than is the case for installations, the centre of gravity in manufacturing shifted from Europe to China, with obvious implications for where jobs are created. In solar PV manufacturing, China’s share of global module production doubled from 39% in 2008 to 78% in 2022. While China continues to expand its own manufacturing capacity, trade restrictions adopted in past years have led Chinese manufacturers to invest in module factories in Southeast Asia that essentially assemble Chinese-made PV cells for export (Yu and Dong, 2023). Southeast Asia’s share of global module production rose from 2% to 11% in 2020 (but fell to 8% in 2022).

Only minimal manufacturing is taking place in other regions of the world. Europe’s share plunged from 30% to 0.5% over 2008-2022, Japan’s dropped from 11% to 0.2% and that of the United States dropped from 6.8% to 1.7% (see Figure 13) (Wood Mackenzie, 2023a). China holds an even more dominant position in wafer, cell and polysilicon production, with 97%, 84% and 83%, respectively, of the global production in 2022 (Yu and Dong, 2023).

Figure 13 Solar photovoltaic module production by country/region, 2008-2022

Notwithstanding rising trade tensions, the value of China’s solar PV exports (mostly modules, with Europe as the principal buyer) grew 64% in 2022, from USD 32 billion to USD 52 billion. This reflects the country’s dominant position and the fact that its modules are up to 57% more affordable than those produced in the United States or Europe. China’s principal cost advantage lies in its lower material costs; while labour costs are also lower in China, they contribute only about 10% or so to overall costs (Yu and Dong, 2023).

Regarding wind equipment manufacturing, Chinese firms have primarily produced for their own sizable domestic market, whereas European companies have dominated markets outside of China. Global competition is, however, set to grow, and this will strongly affect the geography of job creation in the industry. Cost pressures will likely lead to increased automation in blade manufacturing, affecting labour requirements (Lico, 2022b).

Global orders for “completed and firm” wind turbines grew from about 64.4 GW in 2020 to 104.8 GW in 2021, declining slightly to 100.9 GW in 2022. Chinese manufacturers managed to increase their share of global orders from 39% in 2020 to 59% in 2022. All other companies saw a reduction in 2022, from 54.1 GW to 41.1 GW (Wood Mackenzie, 2023b). Chinese firms benefit from stable long-term policies and demand certainty at home, and they have significant economies of scale along the supply chain segments (Lico, 2022a).

Meanwhile, European firms, which have long been the technology front runners, are facing several pressures, including, among others, rising raw material costs, skyrocketing logistics costs and port congestion, higher-than-expected costs of developing new turbines and lingering COVID-19 impacts (Lico, 2022a). In recent years, European equipment manufacturers have closed less profitable plants and outsourced production, especially of blades, ²² to low-wage countries (such as Brazil, India, Mexico and Türkiye) (Lico, 2022a, 2022b).

At the same time, an increasing number of countries have adopted domestic content requirements to incentivise or mandate the establishment of factories on their own territories, serving domestic, regional or global markets (David, 2021). For gearboxes and generators, India and Eastern Europe are positioning themselves as alternatives to dominant Chinese suppliers. All European suppliers of drivetrains have set up factories in low-wage Asian countries and invested in automation to reduce labour costs (Lico, 2022d).

China leads the world in terms of overall wind manufacturing capacity. According to the Global Wind Energy Council (GWEC, 2023), China had 60% of total 163 GW nacelle capacity in 2022, followed by Europe (19%), the United States (9%), India (7%) and Latin America (4%). China is adding over 60 nacelle assemblies to about a 100 already in operation (White, 2023).

China commands a 60% share also in blade manufacturing, followed by Europe (14%), India (11%), and the United States and Latin America (7% each). The distribution of other component manufacturing follows a similar pattern, except generators, where Europe still retains a 22% share. Three-quarters of gearbox manufacturing takes place in China, with the rest divided between Europe and India (GWEC, 2023).

Meanwhile, supply chains for towers are fragmented, with over 240 factories in 30 countries owned by 100 different suppliers (Lico, 2022c). However, growing regionalisation reflects high logistics costs for ever taller towers and is reinforced by tariffs and local content rules. Corporate outsourcing strategies are driven by cost control objectives amid rising competition and ongoing global oversupply. Chinese manufacturers (which supplied 87% of offshore towers in 2021) benefit from lower steel costs besides significant scale advantages to gain an edge over US and European suppliers. Between 2017 and 2020, EU tower production dropped 10%, while imports from China increased by 54% (Lico, 2022c). This prompted governments to impose tariffs ²³ and domestic content requirements. For onshore towers, tariffs led to a shift in supply chains towards Indonesia, the Philippines, the Republic of Korea and Viet Nam.

Policy making regarding the global renewable energy supply chain landscape is shifting due to a growing concern that reliance on distant supply chains – which involve a handful of dominant players – entails vulnerability to disruptions such as pandemics and other disasters. Diverging national strategies and corporate objectives, trade disputes and geopolitical rivalries have added to a sense of upheaval.

Indeed, the narrative has changed dramatically. Just a few short years ago, the dominant view was that solar PV panel and component manufacturing was essentially a commodity business that was best offshored to countries with low wages and other cost advantages.

While outsourcing to low-wage locations continues, the rising geopolitics of the energy transition has generated a new determination to “re-shore”, “near-shore” or “friend-shore” a greater share of manufacturing capacities, as well as critical material supplies (IRENA, 2023e).

In a bid to build and strengthen local capacities, governments are re-embracing previously disavowed industrial policy measures (besides tariffs and non-tariff import restrictions, which have already increasingly been adopted in recent years). Such policies, which entail both incentives and mandates, may include, among other measures, local content requirements; manufacturing clusters; tax credits, subsidies, grants and loan guarantees for manufacturing; public research and development funds, and technology transfer policies; inexpensive electricity and land; and the creation of market demand.

Writing in a broad, economy-wide context, Mazzucato (2022) has argued that governments should “raise the bar” on expectations from the private sector in return for public funding. She suggests four types of conditions for public procurement, grants, loans and tax incentives: broad affordability and equitable access; social and environmental standards; adequate sharing of royalties, equity or intellectual property with the government; and a prohibition of the use of public funds for share buybacks.

China has successfully pursued a broad array of industrial policies for several years, building a fully integrated wind and solar manufacturing industry. More recently, other countries are also prioritising efforts to localise or regionalise portions of the supply chain to reduce energy security vulnerabilities and also capture a greater portion of the socio-economic benefits of the energy transition. Japan, the United States, the European Union, India and South Africa, among others, have announced industrial policy initiatives to stimulate domestic manufacturing and become more competitive vis-à-vis Chinese suppliers.

Meanwhile, it is worth noting that current industrial policy initiatives will not fundamentally change the renewable energy manufacturing landscape for some years, since that requires substantial time and resources to establish the needed capabilities at the necessary scale. China will thus continue to host most renewable energy jobs for the foreseeable future. Further, in solar PV, China hinted in January 2023 at its possibility of imposing export restrictions on wafer, silicon and ingot casting technologies, complicating other countries’ plans to expand their solar manufacturing capabilities (Martinez and Pierce, 2023).

Among the countries that have announced industrial policy initiatives, Japan seeks to establish its own manufacturing base for offshore wind through its “Programme for Promoting Investment in Japan to Strengthen Supply Chains” (GWEC, 2023), which will mandate developers to work with local companies and demonstrate local and national economic benefits. These two dimensions will account for one-fifth of the combined bid scores under the country’s first offshore tender (Diao, Li and Wang, 2022).

India’s industrial policy efforts have focused on solar PV. As shown by Garg and Jain (2022), Indian solar PV developers have preferred low-cost imports to domestic products, and solar manufacturers pay higher interest rates than project developers. India’s solar manufacturing thus lags global technology development by three to five years. The cost of capital and electricity renders domestic production uncompetitive with China. The country continues to rely heavily on not only cell and module imports, but also imports of materials like glass, encapsulant film, backsheets and aluminium framing, as well as the machinery needed for cell and module production. This renders the country vulnerable to supply chain disruptions and price fluctuations, as experienced in 2020–2021 (Gulia et al., 2023).

The Indian government has taken several actions to address this situation. Besides tariffs (a basic customs duty, BCD), non-tariff import restrictions (the Approved List of Models and Manufacturers, ALMM) and domestic content requirements, it implemented a productionlinked incentive (PLI) scheme for solar PV manufacturing in April 2021 (Gulia et al., 2023).

The BCD is imposed on module imports (40%) and cell imports (25%). Meanwhile, Indian module manufacturers rely heavily on imported cells, eventually paying hefty BCD fees. The ALMM lists over 70 approved domestic manufacturers. However, in March 2023, the government decided to defer its implementation until 2024 when the limited availability of high-quality, high-wattage modules from domestic firms added substantial delays in the completion of solar projects. The PLI provides some USD 2.26 billion in funds to stimulate domestic manufacturing. It triggered a doubling in nameplate capacity for PV modules in 2022–2023, to 38 GW. While only 50–60% of this is presently operational, capacity is expected to expand further to 110 GW by 2026. Cell, ingot/wafer and polysilicon production capacity, however, remains marginal or non-existent (Gulia et al., 2023), with module and cell production being the focus of PLI funding (Yu and Dong, 2023).

An estimated 41 200 jobs in plant operation – on average, some 1 050 jobs per gigawatt – could be created if the government’s plan to expand solar PV manufacturing capacity succeeds. ²⁴ However, there has to be a skill-building strategy to address the lack of people with know-how of installing, commissioning and operating such plants (Gulia et al., 2023).

In June 2023, news media reported on a draft proposal for a new PLI incentive, which will offer INR 216 billion (USD 2.63 billion) ²⁵ in subsidies over 2023–2030. The scheme will target companies establishing manufacturing capacity of 50 gigawatt hours of battery energy storage systems for the power grid, and it is hoped that the subsidies will reduce import dependence. The proposed plan mandates the domestic generation of at least 90% of the value (Parkin, 2023).

In the United States, the August 2022 Inflation Reduction Act (IRA) provides significant incentives for renewables, including domestic manufacturing. Existing tax credits for solar and wind were extended to 2024 (GWEC, 2023), after which they will be replaced with a Clean Electricity Investment Credit (funded to the tune of USD 50.9 billion until 2031) and a Clean Electricity Production Credit (USD 11.2 billion) for specified renewable energy and storage technologies. The objective will be to reduce annual greenhouse gas emissions from power generation to 75% of 2022 levels. An Advanced Manufacturing Production Credit (USD 30.6 billion) is available for the domestic production of solar and wind energy components, inverters, battery components and critical minerals (Bhutada, 2023).

To qualify for a “domestic content bonus” payment, at least 40% of the overall mining, production or manufacturing cost of all products in land-based clean energy projects or facilities as well as their components must originate in the United States (a lower threshold of 20% applies to offshore wind projects). This threshold would increase to 55% after 2025. Iron and steel used in projects must be manufactured entirely in the United States. Importantly, the IRA also imposes wage and apprenticeship requirements as conditions for some of the incentives (White House, 2023). For a company undertaking a project larger than 1 MW to receive the full 30% investment or production tax credit, it must pay construction labourers either at or above the local prevailing wage. And with a view to promote workforce development, it mandates qualified apprentices to account for 12.5% of work hours in 2023 (increasing to 15% from 2024) (IREC, 2023).

The IRA triggered announcements of 16 new or expanded wind power manufacturing facilities, 18 new solar manufacturing facilities and 8 new grid-scale battery storage manufacturing facilities, with a potential of nearly 14 000 manufacturing jobs (GWEC, 2023). In solar PV, 52 GW of new module manufacturing capacity (9 GW currently in place) and 20 GW of cell capacity (none existing at present) have been announced since the passage of the IRA but will not be fully operational until 2025 or 2026 (Martinez and Chopra, 2023).

While Europe has a strong industrial base for wind, the continent has very limited PV manufacturing capacity, which is falling far short of the annual demand. The European Union had 19 GW of polysilicon manufacturing capacity, 5 GW of module manufacturing capacity and 1–2 GW of wafer and cell manufacturing capacity in 2022 (Yu and Dong, 2023).

In March 2023, the European Commission proposed a Green Deal Industrial Plan. This was motivated by China’s dominant position in solar PV manufacturing and in minerals critical to the energy transition, as well as by initial concerns that subsidies offered by the US IRA may discriminate against foreign companies and would draw renewable energy and electric vehicle manufacturers across the Atlantic (Chazan, 2023). The Commission’s objective is to scale up clean technology manufacturing in the European Union, so that the related ²⁶ manufacturing capacity approaches or is able to fulfil 40% of the deployment needs by 2030. One key measure is a streamlining of regulations to speed up project permitting. Another measure is a relaxation of strict rules governing state aid for capital investments in low-carbon projects (Carbon Brief, 2023).

A proposed Net-Zero Industry Act sets non-binding manufacturing capacity targets and requires member states to apply non-price criteria (environmental sustainability, energy system integration and supply chain resilience) to auction procurement mechanisms. ²⁷ The Net-Zero Industry Act also includes measures to build a skilled workforce (European Commission, 2023a). A Critical Raw Materials Act aims to increase the EU’s capacity for domestic sourcing and refinement of such materials, diversify imports and increase the “circularity and sustainability” of raw material use. It aims to speed up permitting processes and meet a quarter of the European demand for strategic raw materials through domestic mining (10%, up from 3% at present) and recycling (15%) (BourgeryGonse, 2023). Meeting these targets will not be easy and may clash with environmental protection objectives (Noyan, 2023). A European Critical Raw Materials Board would be established as a new central purchasing agency (European Commission, 2023b).

In September 2022, Germany’s Ministry for Economic Affairs and Climate Action (BMWK, 2022) proposed creating a European Platform for Transformational Technologies “to develop and promote the EU’s industrial production capacities in five strategically important technologies – wind energy, solar PV, electrolysers, electricity grids and cables, and heat pumps – large and small” (Taiyang News, 2022). Further, the ministry decided to fund a study on the feasibility of restoring a complete solar PV supply chain in Europe, including materials, manufacturing, research and development, and a workforce with the requisite skill sets (Hutchins, 2023).

In South Africa, the government responded to the high import reliance by releasing a draft South African Renewable Energy Masterplan (SAREM) for public comment in mid-2023. The Masterplan, which is based on a collaboration among government, industry and labour, seeks to foster industrial development and job creation through value chain localisation for solar, wind and battery storage technologies. SAREM acknowledges that prior efforts to build industrial capabilities for renewable energy have so far yielded mixed results due to stop-start procurement cycles, local content rules that were not well aligned with realities, and inconsistent policies.

Industrial policy measures proposed under SAREM include financial and non-financial interventions to support the growth of black-owned and black-managed businesses (Black Industrialist Programme); preferential-rate loans to support domestic manufacturers (Manufacturing Competitiveness Enhancement Programme); and local development finance institutions’ support in enhancing industrial capabilities and stimulation of investment through efforts to reduce infrastructure costs (Critical Infrastructure Programme) (DTIC, 2023).

Besides building or strengthening industrial capacity, policies also highlight the “critical materials” needed to produce solar panels, wind turbines and other energy transition technologies. Countries strive to secure access to supplies as they increasingly compete to gain an advantage in the race towards building cleaner energy economies (IRENA, 2023e). As highlighted by a recent Financial Times report, this represents a sharp turnaround: “For decades, developed economies shunned these sorts of industrial activities, content to offshore the environmental damage to the developing world where costs would also be lower” (White, 2023).

However, this new race for resources may not offer much in the way of lasting socioeconomic benefits for resource-rich countries in Africa, Asia and Latin America. At present, many do not possess the capacity to refine raw materials into processed inputs. The risk is that they will once more be relegated to the role of commodity suppliers, dependent on unpredictable commodity markets for price setting and unable to create jobs and value further downstream. There also need to be safeguards to ensure that the race for materials does not translate into a race to the bottom, in terms of environmental degradation and burdens imposed on workers and local communities.

In January 2023, several organisations jointly launched an Africa Renewable Energy Manufacturing Initiative to scale up manufacturing capabilities on the continent and create substantial employment. Doing so would require sustained efforts in skill training and career development for engineers, technicians and others, besides measures to attract manufacturers and incubate African manufacturing projects (Bloomberg Philanthropies, 2023).

A related report by Sustainable Energy for All (SEforALL, 2023) identifies countries with the highest feasibility for such an approach. The report suggests that among the key success factors are sufficient demand, manufacturing scale, political stability, appropriate policies and regulations, trade relations with China (as the leading force in the sector and with strong foreign direct investment in the region), supporting infrastructure and the ability to export. The African Development Bank has launched an “Industrialise Africa” initiative to support such efforts, providing USD 300 million in financing (SEforALL, 2023).

A number of resource-rich countries are seeking to exert greater control over minerals critical to the energy transition. The objective is to retain a higher share of the socioeconomic benefits and avoid becoming locked into the role of raw material suppliers. According to an analysis of the Organisation for Economic Co-operation and Development (OECD, 2023), the number of export restrictions on critical raw materials worldwide grew fivefold since 2009.

The Plurinational State of Bolivia and Mexico have nationalised their lithium industries, while Zimbabwe introduced a ban on raw lithium exports (Stott and Bryan, 2023). Indonesia has since 2014 banned exports of unprocessed nickel ore and succeeded in attracting foreign direct investment for building a domestic smelting industry. The country also restricted exports of bauxite, an aluminium precursor, and a ban on copper concentrate exports is to take effect in 2024 (Hook, Dempsey and Nugent, 2023). Indonesia and the Democratic Republic of Congo have also adopted export restrictions on materials used in lithium-ion batteries (Crooks, 2023). In the Democratic Republic of Congo, a second copper smelter is under construction (Hook, Dempsey and Nugent, 2023).

In early 2023, Chile’s government announced plans – subject to Congressional approval – to negotiate a majority stake in the country’s two existing lithium projects. The negotiation is to be through the state-owned companies Codelco and Enami initially and later through a proposed national lithium company. Policy objectives include developing local value chains, increasing wealth retained within the country and establishing stricter environmental rules concerning the water-intensive process needed to extract lithium from salt flats. The environmental rules are to be established in consultation with local communities (Government of Chile, 2023). Chile is offering preferential prices for lithium carbonate to firms investing in domestic value-added projects. Examples of such firms include China’s BYD, which plans to build a lithium cathode factory that could employ 500 people (Hook, Dempsey and Nugent, 2023).

In June 2023, Namibia decided to ban the export of unprocessed materials including lithium, cobalt, manganese, graphite and rare earths such as dysprosium and terbium in order to retain a greater share of the wealth generated from their use (Reuters, 2023).

While stepping out of a raw material supplier role can support a country’s national economic development, it requires more than industrial policy to ensure equitable outcomes from this role transition. For example, as noted by the Business & Human Rights Resource Centre (Pouhe and Gwanyanya, 2023), violations of communities’ land rights and livelihoods (including lack of consultation, evictions, unjust resettlements and inadequate compensation), as well as abuses of labour rights and human rights violations, have been recorded around several transition mineral mining projects as well as some renewable energy installations. Further, local protests and lawsuits have led to some planned projects being suspended. Meanwhile, better approaches and business models are beginning to emerge. Pouhe and Gwanyanya (2023) argue in favour of three core principles: coownership models that generate buy-in from workers and communities; human rights due diligence and social protection, with an emphasis on worker (re-)training and decent work; and free, prior and informed consent in negotiations with local populations, especially indigenous communities.

Previous editions of this report have emphasised that job quality matters just as much as job quantity, and that the transition from a fossil-fuel-dominated energy sector to a cleaner energy future needs to be just and inclusive in relation to workers and communities. This outcome requires not only foresight and comprehensive policies, but also meaningful social dialogue involving governments, private companies and business associations, labour unions and other stakeholders.

Based on its tripartite structure involving governments, businesses and organised labour, in 2015 the International Labour Organization developed guidelines for a just transition (ILO, 2015). At the June 2023 International Labour Conference, tripartite representatives reaffirmed the urgency of action to advance a just transition to achieve social justice, decent work and poverty eradication, and tackle environmental and climate change. The conference declared that “A just transition promotes environmentally sustainable economies in a way that is inclusive, by creating decent work opportunities, reducing inequality and by leaving no one behind” (ILO, 2023).

To accelerate and scale up the implementation of the 2015 guidelines, the International Labour Conference elaborated a coherent and practical framework for action based on four building blocks: (1) promoting inclusive, sustainable and job-rich economies; (2) advancing social justice; (3) managing the just transition process and (4) financing a just transition (see Figure 14).

This section discusses perspectives and actions by the tripartite stakeholders.

Several countries have recognised the need for a just energy transition and are leveraging this unique opportunity to rebuild economic structures by generating jobs and income, promoting social justice, restoring natural capital and reducing environmental impacts. Renewable energy investments create jobs in equipment manufacturing, installations, and operation and maintenance, while energy efficiency programmes for buildings, transportation and industries create jobs in areas such as energy auditing, retrofitting and the manufacturing of energy-efficient technologies. A number of actions can ensure that the transition to a clean energy future is jobs rich and just (see Box 5).

For example, the governments of South Africa and Spain have adopted several policies in this vein. The South African government, after submitting its Nationally Determined Contribution towards achieving the Paris Agreement’s goals in 2021, launched the Just Energy Transition Investment Plan (JET IP), which is to be implemented between 2023 and 2027. This plan outlines a USD 98 billion investment in renewable energy, electric vehicles and green hydrogen, and includes provisions for social and economic development such as job creation, skill development and community empowerment. While the government’s policy on just energy transition is still evolving, it nevertheless reflects the government’s determination to diversify its energy mix and ensure that the transition to a low-carbon economy contributes to its efforts to tackle inequality, poverty and unemployment (ITJ, 2022).

It is crucial to recognise, however, that relying exclusively on funding from the JET IP will fall short of fulfilling the investment needs for a fair transition towards sustainable energy for each recipient. South Africa’s JET IP agreement will contribute less than 10%, totalling USD 8.5 billion, in funding. Further, a mere 0.4% of the overall planned amount under South Africa’s JET IP will be allocated to boost economic diversification, innovation and skill development. Grants constitute just 4% of the total JET IP funding package, exposing South Africa to risks related to privatisation, which could also be applicable to other beneficiary nations (Gunfaus et al., 2022; IRENA and CPI, 2023).

The Spanish government has introduced a set of policies to optimise economic activity and employment prospects in the transition to a green, low-carbon economy, while minimising potential negative social and economic impacts. Known as the Spanish Just Transition Strategy, these policies encompass core objectives, which include boosting competitiveness and addressing social cohesion challenges arising from the economic transition towards ecological sustainability. Opportunities are intended to be accessible and equitable for women, vulnerable populations and rural residents, and labour market status and trends with respect to the green transition are closely monitored. Further, the strategy promotes the establishment of sectoral forums to facilitate collaboration and knowledge sharing. Specific plans for key economic sectors entail thorough analyses of challenges, opportunities and threats, and the formulation of necessary measures for a successful transformation.

The strategy also entails an evaluation and enhancement of the current tools and instruments provided by the General State Administration to support businesses. This support includes, among other factors, provisions for research and development, financing, loans, guarantees and training. Further, the Spanish Just Transition Strategy proposes suitable policies to support co-ordinated efforts among various entities, including the General State Administration, autonomous communities, local authorities and social stakeholders. These policies encompass industrial support, research and development, promotion of economic activity, employment and vocational training. Lastly, the strategy focuses on minimising adverse impacts in vulnerable regions through the implementation of Just Transition Agreements. It provides technical and financial support for the execution of these agreements, as demonstrated by the Urgent Action Plan, which targets regions that confront closure of coal mining and coal-fired power plants (ITJ, 2022).

To be effectively implemented, policies will have to be well co-ordinated, include all relevant stakeholders and be adequately financed. Managing the transition process will require coherence across policy areas and effective institutional co-ordination to plan and implement changes in accordance with evidence-based monitoring and evaluation frameworks.

Achieving a just transition requires determined policy action that puts a human face on policies and integrates climate and employment targets into a coherent policy framework. A well-designed and progressive climate environmental policy could be beneficial for employment and equity targets. A transition towards climate neutrality can generate net employment, although this varies significantly across sectors.

Employer and business membership organisations play a crucial role in driving the renewable energy transition by advocating for supportive policies, promoting investment in clean technologies, and facilitating partnerships between businesses and governments. These organisations understand that a renewable energy transition can create new business opportunities, drive innovation and support economic growth.

For example, the United States Council for International Business participates in international forums such as the United Nations Framework Convention on Climate Change and represents business interests in global climate discussions. The Council launched the initiative Business for 2030 (n.d.) in 2015 to support the 2030 Development Agenda and the Sustainable Development Goals (SDGs). Business for 2030 is a platform to showcase private sector efforts aligned with the SDGs, and features over 200 projects of over 50 companies in more than 150 countries. These projects contribute to 89 of the 169 SDG targets.

In the United Kingdom, the Confederation of British Industry has published reports and policy recommendations highlighting renewable energy’s economic benefits. The Confederation also engages with the government and stakeholders to advocate for supportive policies and regulatory frameworks. It has created several toolkits including best practices and practical information for its member companies. The toolkits cover topics like “how to create a culture of sustainability in your business” (CBI, 2023) and “how your business can take action and seize net zero opportunities” (CBI, 2022).

The National Business Association of Colombia (Asociación Nacional de Empresarios de Colombia, ANDI) collaborates with government agencies, industry stakeholders and civil society to develop strategies that support renewable energy adoption and provides businesses with guidance and resources related to sustainable practices and clean energy adoption. In 2014, it launched the Biodiversity and Development Initiative, which aims for greater comprehensive biodiversity management in the country through fostering collaboration among businesses, institutions and local groups as well as investment (ANDI, 2023).

In South Africa, the Business Unity South Africa (BUSA) advocates for policies and regulations supporting the growth of renewable energy sectors. BUSA also collaborates with industry stakeholders to develop skill training programmes and promote job creation in renewable energy. In the domain of sustainable energy and infrastructure, BUSA’s specific objectives include, among others, public consultations for a co-ordinated highlevel road map of all pending energy legislation and policies; finalisation of the Integrated Energy Plan and the Integrated Resource Plan with planning transparency; and continuing the Renewable Energy Independent Power Producer Procurement Programme (BUSA, 2023).

The Confederation of Danish Industry (CDI 2016) supports knowledge-sharing platforms and provides resources to help businesses make a renewable energy transition that is fair and inclusive for workers. The CDI actively participated in the negotiations and discussions that led to the 2018 Danish Energy Agreement, which outlines the country’s energy and climate goals, including a commitment to transitioning to renewable energy sources and mitigating greenhouse gas emissions. The CDI was crucial in advocating for policies and incentives that support and encourage clean energy investments and facilitate the transition for businesses and workers.

Labour unions contend that investing in clean energy transition technologies will not inherently guarantee the creation and sustainability of good jobs. Unions have concerns about the progress on a just transition in different countries and the lack of union involvement in the process (IndustriALL Global Union, 2021). While social dialogue experiences vary from country to country, fundamentally, a just transition is possible only with social dialogue and a well-organised workforce. Transitions will be challenging but not impossible, and workers must be assured of a just transition for them, their families and communities.

To gain insights on the future prospects of energy sector workers and address unions’ concerns, the IndustriALL Global Union, the International Trade Union Confederation and LO Norway launched the Initiative for a Just Transition in the energy sector in 2022. The Initiative had 121 participants from unions in 32 countries and involved information exchange regarding the future of work in the energy sector and on ways in which workers could transfer jobs in the oil and gas supply chain to the renewables sector.

Unions and experts shared information on jobs, skills, markets, investments and emissions for technologies such as hydrogen, carbon capture and storage, offshore wind and other renewables, alternative fuels and energy services. A subsequent report (IndustriALL Global Union, International Trade Union Confederation and LO Norway, 2022) offered conclusions and recommendations. A series of ten workshops ²⁸ with experts from the International Renewable Energy Agency and the International Energy Agency, energy sector unions and national labour confederations was held between April and October 2022. The workshops focused on the implications of net zero for energy sector jobs. Participants exchanged information on emerging technologies, what the transition looks like in different parts of the world, as well as union strategies for ensuring good jobs and a just transition.

The US Project Labor Agreement – signed between North America’s Building Trades Unions and the Danish offshore wind company Ørsted – is a good example of possibilities for renewables sector workers. The Project Labor Agreement was for Ørsted to construct its US offshore wind farms using a unionised workforce. The National Offshore Wind Agreement covers all Ørsted contractors and subcontractors that will construct offshore windfarms along the Atlantic coast.

The agreement is a commitment to build infrastructure that will reduce carbon emissions and create high-wage union jobs. It can be a model for the entire renewable industry as well as for other emerging technologies, where labour standards and environmental performance go hand in hand and where the goal of green jobs being union jobs becomes real.

According to Ørsted, US offshore wind projects could create some 80 000 direct jobs plus many thousands of indirect jobs in manufacturing, maritime work, logistics and clean energy technology (Ørsted, 2022). The training and other provisions of the Project Labor Agreement will help generate a workforce capable of building complex offshore wind energy infrastructure. Ørsted itself has committed USD 23 million to bolster existing efforts or establish new programmes for preparing US workers for offshore wind.

This tenth edition of Renewable energy and jobs documents the continued growth of renewable energy employment, with job numbers estimated to have grown from 7.3 million in 2012 to 13.7 million in 2022 worldwide. The jobs are predominantly in a few countries – China in particular, but also Brazil, India and the members of the European Union – which represent the majority of capacity installations and play key roles in equipment manufacturing, as well as engineering and various services. At present, jobs are unevenly distributed between men and women, and, as pointed out in previous editions, the qualitative aspects of renewable energy jobs, including wages, occupational safety and health, job security and rights at work, demand greater attention.

Renewable energy investments have noticeably increased in volume in recent years. Further accelerating the pace implies that in the coming years and decades, millions of additional jobs will be created. However, this requires a range of accompanying measures, for example, increased efforts to expand education and skill-building programmes; retraining of workers from fossil fuel industries; and greater opportunities for women, youth and minorities to join the renewable energy workforce.

"We are on a highway to climate hell with our foot on the accelerator."
UN Secretary-General
António Guterres
COP 27, 7 November 2022

Achieving the energy transition in a manner that allows humanity to meet urgent climate and environmental priorities will require significantly accelerated investments and installations. Progress remains highly inadequate. In fact, it is not an exaggeration to say that, for now, the world is experiencing an energy addition – with renewables forming another layer on top of the existing, fossil-fuel-dominated system – rather than the needed energy transition (Hickel, 2022).

A steady stream of fresh scientific assessments and more frequent extreme weather events lend ever-greater urgency to a fundamental transformation. Yet, geopolitical tensions, trade rows and supply chain disruptions have led governments to become increasingly preoccupied with shoring up energy supplies, including the very fossil fuel sources that humanity has pledged to wean itself off.

Corporations and governments continue to look to economic growth as the remedy to many challenges. Yet an ever-expanding economy requires ever greater energy supply, making the transition even more challenging. And there can no longer be any doubt that endless growth is not possible on a planet with finite resources and capacity to absorb carbon and pollutants. The Earth is already sending unmistakable signals of increasing distress. The latest scientific assessment of nine planetary boundaries (Richardson et al., 2023) finds that six of them have already been crossed. ²⁹ Persisting with the current approach will worsen the situation, threatening a cascade of rising calamities. A destabilised climate system, widespread biodiversity loss and overburdened terrestrial and marine ecosystems form the greatest threats to humanity’s well-being and indeed its long-term survival (Hickel, 2022).

"he era of global warming has ended; the era of global boiling has arrived."
UN Secretary-General
António Guterres
27 July 2023

Also, given the wide – and growing – disparities in wealth and human development between and within countries, it is clear that the current economic approach has failed to bring about universal well-being. Studies show that even for those who are materially well off, growth in material consumption past a certain point does not lead to greater happiness and offers diminishing returns. But maintaining the current economic model under conditions of growing climate and environmental constraints exposes the poorer portions of humanity – principally people in the Global South – to the effects of accelerating resource depletion and renders them increasingly vulnerable to climate shocks.

IRENA’s work has long emphasised the importance of ensuring the energy transition delivers broad socio-economic benefits, so that people can have a tangible stake in it, in turn securing popular and political acceptance. The energy transition needs to be embedded within broader systemic changes that aim to ensure a level of human well-being at lower levels of energy and material throughput, advance equity among countries and communities (overcoming historical disparities), and align economies with climate and resource constraints.

Socially, economically and politically, this transformation is an unavoidable yet most complex task. The increasingly evident limits and contradictions of conventional economics and growth-based paradigms have given rise to an increasingly vibrant discussion of workable concepts and approaches for a more just and inclusive transition and to allow humanity to live within planetary boundaries. For close to a century, GDP has been the accepted yardstick to measure progress, but it suffers from well-documented shortcomings and pitfalls – for example, the inclusion of activities that do not contribute to well-being while excluding others (such as unpaid work, most often carried out by women) that do. Modifications of the GDP, or full-blown alternatives such as Bhutan’s gross national happiness index, may measure the economy and human well-being more accurately and could facilitate a different set of socio-economic policies (Hickel, 2022).

"We need a renewables revolution, not a self-destructive fossil fuel resurgence."
UN Secretary-General
António Guterres
06 February 2023

Wealthy countries that have consumed the bulk of the world’s energy and materials will have to reduce their claim. Greater efficiency can help, but experience shows that the “rebound effect” – cost reductions from improvements in efficiency allow consumers to buy more of the improved product or increase demand for other products – prevents any lasting reduction of overall consumption volumes.

There is thus a need to scrutinise fundamental production and consumption patterns and make an even stronger distinction between human needs and wants. Doing so could create the space needed by people who currently consume less than what is needed for sustaining a decent life. A less consumption-intensive economy would imply a shift in employment away from the extractive sector and manufacturing of disposable goods towards recycling, refurbishing and remanufacturing activities. Energy sector employment would be less extensive than under a conventional trajectory. Societies may thus need to explore new approaches – such as the concept of a universal basic income – to make people’s incomes less dependent on unsustainable practices.

Humanity faces a broad, and potentially conflicting, set of objectives. For one, there is a clear need for a significantly rapid transition away from fossil fuels, in light of the growing climate crisis. However, renewed concern about energy supply security runs high and, to some extent, may reinforce fossil fuel reliance. Further, hundreds of millions of people need to be provided improved energy access, to fulfil the promise of Sustainable Development Goal 7. This concerns not just a need for more ample supplies but also for cleaner energy. Narrowing the vast chasm in energy consumption levels between rich and poor countries also requires re-thinking the excessive energy use in consumer societies. Yet socio-economic inequalities and pockets of energy poverty are growing even within richer societies.

Uncertain socio-economic prospects may strengthen the appeal of political forces that favour parochial approaches, in turn weakening global solidarity and diminishing prospects for cooperation in pursuit of shared goals. It is critical to ensure not only that fossil fuel-reliant workers and communities have a viable perspective in a new energy system, but also that women, youth, minorities and marginalised groups are given equal opportunities. Last but not least, the energy transition itself must proceed in a manner that safeguards ecosystems, a concern that ranges from the mining and processing of critical raw materials all the way to how renewable energy equipment is handled at the end of its useful life. Yet, the growing urgency of the energy transition could translate into tremendous pressure to extract energy transition minerals as quickly as possible while sidelining environmental concerns and local community interests.

This panoply of goals and interests may be difficult to reconcile, especially in a context of growing geopolitical rivalry that renders global co-operation more difficult. It is a task that cannot be left to markets if just, inclusive and sustainable outcomes are to be more than a slogan. Priorities must be determined in open debate and policy decisions must be guided by social dialogue. Governments and other stakeholders will have to play a proactive role in transforming economic systems, reinforcing an argument that has underpinned IRENA’s staple of socio-economic reports: policy making must be inspired by a holistic framework that considers technological aspects in conjunction with social, economic and environmental priorities (see Figure 15).