Buildings

Spending category Construction

Consumer Spending Consumer savings Lost utility revenues Loan intrest

Net-job years: 20 year total

Illustrative examples Source: Kats (2010)

materials. The figures are projected to grow to 21,000 and 15,000 respectively by 2012. The same study concludes that roof insulation activities accounted for 3,050 direct jobs in 2006, expected to double by 2012.

The use of green appliances and components has high job creation potential as well. Research by the U.S. Department of Energy estimates that adopting standards for washing machines, water heaters, and fluorescent lamps alone would create 120,000 jobs in the USA by 2020. In India the introduction of a single appliance, fuel-efficient bio-mass cooking stove to replace the traditional stoves in 9 million households could produce 150,000 jobs in addition to the health benefits (UNEP, ILO, IOE, ITUC 2008).

Green investment associated with recent government stimulus packages has boosted investment in green buildings. An estimated 13 per cent of Germany’s overall stimulus package (around US$ 105 billion) is expected to create 25,000 jobs in manufacturing and construction for retrofitting buildings (UNEP 2009a). Opportunities for training in retrofitting are also increasing as the lack of skilled and certified professionals is proving to be a significant barrier in the adoption of green buildings, especially in developing countries.

Focusing on existing residential and public-sector buildings, a recent study by Ürge-Vorsatz et al. (2010) investigated the net employment impacts of a large- scale energy-efficiency renovation programme in Hungary. The study simulates five scenarios that are characterized by two factors: the type or depth of retrofits included in the programme and the speed of renovation assumed. The BAU scenario assumes no intervention and a renovation rate of 1.3 per cent of the total floor area per year. Conversely, the “Deep Retrofit, fast implementation rate” scenario assumes that 5.7 per cent of the total floor area will be renovated per year. This research demonstrates that a renovation programme of this scale could generate up to 131,000 net new jobs in the country, whereas a less ambitious scenario would see the creation of only about 43,000 new jobs.

Under the “deep renovation” scenario, job creation is calculated to peak in 2015 with a massive new 184,000 jobs, notwithstanding employment losses in the energy- supply sector. It is important to highlight that close to 38 per cent of these employment gains result from indirect effects on sectors supplying the construction sector, as well as from the higher spending power resulting from the previous rise in employment.

A number of studies have demonstrated that investments in green buildings produce more jobs than they replace in the energy-supply industry. A study by Wei, Patadia and Kammen (2010) found that solar panels (often used in green buildings) create 0.87 job-years per gigawatt-hour (GWh) produced and energy-efficiency investments create 0.38 job-years per GWh saved. That is considerably higher than coal (0.11 job-years per GWh), natural gas (0.11 job-years per GWh), or nuclear power (0.11 job-years per GWh) create. A study by David Roland-Holst (2008) found that between 1976 and 2006, energy-efficiency improvements in California created 1.5 million jobs, net of the jobs lost in energy-producing industries. Nevertheless, the ILO (CEDEFOP 2010) has reported job losses in the cement industry associated with employment shifts to other industries, which underline the need for retraining and upgrading skills.

The studies referenced here confirm the potential for job creation in the building construction sector. If the huge demand for new buildings (social housing, hospitals, schools, etc.) that exists in developing countries is to be considered, the potential is much higher. Further, programmes for greening the sector will provide an opportunity to address informal production and ensure creating green and decent jobs, engaging and updating the skills of both the formal and informal sector workforce. On the other hand, most of the studies do not net out the jobs lost from redirecting investment into green buildings that would have otherwise been invested elsewhere in the economy. Also there is a range of barriers, which hamper the employment- generating potential of construction investment being fully realised.

357 Impact Green premium increases construction spending

Because of the green premium, consumers spend less in the short term Because of the energy savings, consumers spend more in the long term Utility revenues decrease because of energy savings Intrest paid to banks on construction loans

Amount (millions) $ 1.0

$ -0.6 $ 1.0

$ -0.8 $ 0.3

Job multiplier 12

11 11 3 8

Job impact (job years)

12.00 -6.60 11.00 -2.40 2.40

16.40 Table 5: Twenty-year net economic impact of a US$ 1 million investment in green building improvements: