Green skills shortage threatens Europe’s climate ambitions

The troubled waters of the North Sea will soon become home to the world’s largest green energy power plant, according to a grandiose mission statement released by nine neighboring countries in April.

The Ostend Declaration calls for a doubling of offshore wind capacity by 2050, fueling green hydrogen production, with new interconnection cables between the UK and mainland Europe.

But his heady rhetoric has received a quick reality check from industry, with more than 100 companies warning that Europe lacks the capacity to deliver on these commitments. One of the biggest obstacles, said industry body Wind Europe, has been a lack of skilled workers.

“Investments alone don’t make blades, sail ships or operate wind farms,” ​​he said. “Above all, national governments need to build the necessary skills base.”

The comments highlight one of the biggest threats to the green transition. On the one hand, fears of job losses make governments reluctant to displace workers from old industries, as seen in Germany’s opposition to a total ban on the sale of combustion engine cars from 2035.

People are not developing green skills fast enough to meet climate goals

On the other hand, severe skills and labor shortages could hinder the development of new industries and slow down urgent efforts to make homes and commercial buildings more energy efficient.

Even as European governments worry about losing new high-tech jobs to US subsidies, evidence suggests they are failing to train enough workers for the more mundane tasks of installing heat pumps and isolation.

“People aren’t developing green skills fast enough to meet climate goals,” says Sue Duke, global public policy manager for professional network LinkedIn.

The company’s data suggests that hiring for green roles has held up, both in the United States and globally, amid weakening job markets. Sustainability analysts, specialists and managers are among the top 10 job titles for which vacancies have grown fastest over the past year. But the share of professionals advertising profiles that mention green skills or experiences hasn’t kept pace.

Estimates of the scale of the challenge vary wildly because there is no agreed-upon definition of what constitutes a so-called ‘green job’.

Some researchers count the number of people engaged in sectors directly driving the net zero transition – such as renewable energy or electric vehicle manufacturing – and generally believe that the share of green jobs is less than 5% of employment in developed economies.

Others take a different approach, looking at occupations that have a high proportion of green-related tasks. These can be roles dedicated to green businesses, such as solar panel installers. But they can also include traditional occupations where people increasingly take on green tasks – such as an architect transitioning to more energy-efficient design – or roles such as chemists or hydrologists, which are more in demand as a result of the green transition.

Using these broader definitions, some studies classify a fifth or more of jobs as “green.”

The big question, however, is whether new jobs will be seen as good.

Until now, there has been a broad consensus among researchers that green jobs are both higher skilled and better paid, as well as more likely to be filled by men and more highly educated. However, a study published earlier this year by the London School of Economics’ Grantham Research Institute calls that into question. Looking at detailed data from online job postings in the US and UK, it was found that low-carbon jobs actually had higher requirements in terms of technical, managerial and social skills than other jobs and often required computer skills which were in great demand in other sectors. However, they weren’t necessarily better paid.

In the UK, for example, large numbers of people work in green finance, raising the average salary for low-carbon jobs in the economy, but they don’t necessarily earn more than in a non-green finance role. In the United States, meanwhile, an engineer working in the oil industry earns significantly more than in a similar engineering job elsewhere. A low carbon engineer does not require a similar salary premium.

“The real problem for these people [working in fossil fuel jobs] is that they are paid more than green jobs, so the transition is difficult even if the skills are similar,” says Francesco Vona, one of the authors of the study.

Vona also says a lack of investment in retraining workers is a barrier to achieving governments’ goals for retrofitting homes. “For insulation and so on, they really have to learn new things and the construction industry generally doesn’t invest in on-the-job training,” he says.

However, Anna Valero, a senior policy fellow at the LSE’s Center for Economic Performance, says wages in the green economy could soon rise rapidly in the US, due to the Biden administration Inflation Reduction Act stimulus package, which will stimulate demand for limited skills.

European governments could learn from the US approach by offering additional tax incentives to companies that pay prevailing salaries and hire apprentices, he adds. But they’ll also need to put more thought into mapping career paths in industries that are likely to see “a busy set-up period”, after which the job will boil down to ongoing maintenance.

Some of this work is underway in Germany, which has long had a more structured system than most countries for vocational education. Markus Janser, a senior researcher at the German Institute for Employment Research, says all courses now include sustainability content.

However, he also stresses that the green transition cannot wait for young people to enter the job market and argues that governments should provide clear incentives for companies to invest in new technologies.

“We will have no problems with skills shortages as soon as these jobs are attractive in terms of wages and working conditions. . . and if people want to go to these jobs even if they’re not green at heart,” she says. “We’re not in that position now.”