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Climate change and energy - PSI policy priorities

Discussion paper

January 2010
 Table of contents

I. Social, environmental and security challenges associated with electricity ....................... 4

A. Environmental sustainability, including climate change .............................................................. 4
1. Electricity is responsible for 40% of global CO2 emissions ..................................................... 4
2. Other environmental and health and hazards associated with electricity ............................... 6
3. Electricity systems’ vulnerability to climate change ................................................................. 7
B. The Social dimension .................................................................................................................. 8
C. The reliability dimension .............................................................................................................. 9
II. Scenarios for a sustainable energy future: a low-carbon, sustainable electricity sector is
possible ................................................................................................................................................ 11
A. The IEA and Greenpeace low-carbon scenarios: key assumptions.......................................... 11
B. Both scenarios agree that energy conservation, rapid switching to renewable, grid
improvements and phasing out of conventional coal power plants are essential elements of the
transition to a low carbon power sector ............................................................................................. 12
C. The major divergences relates to the role of CCS and nuclear. ............................................... 13
D. Substantial additional investment are needed under both scenarios ........................................ 15
E. Implications for sustainability ..................................................................................................... 15
F. Avoiding high risks technological fixes ...................................................................................... 17
III. The employment consequences of climate change mitigation in the power sector ........ 19
A. Understanding the likely effects of climate change mitigation on jobs ...................................... 19
B. The impact of measures to cut CO2 emissions on global employment in the power sector,
including manufacturing, generation and distribution ........................................................................ 20
C. Challenges for jobs in the coal power sector............................................................................. 22
D. The quality of the jobs created by the low carbon energy economy ......................................... 23
E. New jobs for members of PSI affiliates ..................................................................................... 24
IV. Policies ..................................................................................................................................... 27
A. Electricity market liberalisation makes carbon mitigation more expensive to achieve .............. 27
B. Increasing and redirecting public support for energy R&D and deployment of low-carbon and
conservation energy technologies ..................................................................................................... 28
C. Public investment and public service solutions for renewables and energy efficiency ............. 29
D. Pricing carbon emissions........................................................................................................... 30
E. International cooperation ........................................................................................................... 32

2
Introduction

This paper aims at generating discussion among PSI affiliates on the implications of climate change
for public services in energy, employment in related sectors and PSI’s advocacy. It will lead to a PSI
policy position to complement the statement “Climate change, Beat the heat” endorsed by PSI
Congress in 2007.
As major unions in the electricity and gas industries and local governments in their country, PSI’s
affiliates have the opportunity to play a great role in shaping national responses to climate change.
As climate change is a global problem, national responses must be embodied in a global approach
that takes into account inequalities in greenhouse gas emissions and access to energy,
interdependencies in the global energy markets and competitiveness issues, among other things.
Energy, and electricity in particular, is essential for sustainable development. However, the current
energy model comes with high costs, for the environment, human development and the economy.
Preventing climate change has emerged as an urgent task, and one that is especially of concern to
the electricity sector which is responsible for 40% of global carbon‐dioxide emissions.
Climate scientists are saying that global warming, as evidenced by melting polar ice caps, is worse
than predicted by the Intergovernmental Panel on Climate Change (IPCC) and that global emissions
must peak by 2015 if climate chaos, and resulting social chaos is to be avoided.
PSI’s view is that efficient solutions to climate change in the energy sector have to be enshrined in a
broad vision of sustainability integrating and balancing the needs for universal access to energy and
energy security.
The task is challenging for the power sector and its workers. The transition to a low carbon energy
model requires structural changes in the way electricity is produced and used to occur within the
next 10 years. It will change the nature of work, labour markets, skills demand and workplace
industrial relations. Anticipating and assessing those changes will help design Just Transition
programs that will ensure the transition eventually occurs in a socially fair manner for workers and
communities.
Workers in public services have a major role in making the changes happen, at the level of the
workplace, sector, country and internationally. Collective bargaining and international framework
agreements are powerful tools for workers and their representatives to advance sustainability in the
electricity sector. Workers and unions also have a responsibility to participate in policy making.
This paper demonstrates that it is possible to achieve simultaneously ambitious goals for climate
change mitigation, universal access to energy and energy security and that collective provision of
electricity is the most cost efficient and effective way to do it.
The discussion paper is divided into four parts. Part I looks at the social, environmental and security
challenges associated with electricity, in an integrated manner. Part II analyses the technological,
economic and social implications of two scenarios that both assume a rapid decarbonisation of the
power sector. In part III, the employment consequences are examined. Part IV discusses policy
options and provides recommendations for action by governments.

3
I. Social, environmental and security challenges associated with electricity

This section considers the three challenges linked to electricity ‐ environmental sustainability,
universal access, energy security ‐ separately, highlighting the potential trade‐offs and synergies.

A. Environmental sustainability, including climate change

1. Electricity is responsible for 40% of global CO2 emissions
The electricity sector is a major source of carbon dioxide (CO2) emissions, the gas that most
contributes to global warming. Power generation accounts for about 40% of global CO2 emissions.
60% of electricity is produced from fossil fuels, mainly coal and gas, which emit large amounts of
greenhouse gases.

CO2 emissions from power have grown by 50% since 1990, as a result from a continued growth in
world electricity consumption (Figures 1 and 2). Electricity has indeed been a preferred form for
energy consumption and has consistently registered a higher growth rate than other forms of energy.

Figure 1: Sources of Global CO2 Emissions (1970‐2004, Direct Emissions by Sector Only)

Source: Intergovernmental Panel on Climate Change (IPCC), Fourth Assessment Report

Figure 2: World Electricity Generation by Fuel (2006)

Notes: Other includes geothermal, solar, wind, combustible renewables & waste, and heat.

Source: International Energy Agency (IEA), Key World Energy Statistics 2008. Paris, 2008.

4
Coal emits more CO2 than other energy alternatives. When all stages of the fuel cycle are considered
‐ from resource extraction and transport to manufacturing and construction of the power plant and
the burning of the fuel to produce electricity‐ coal emits two times more carbon dioxide than gas
power stations, and 20 times more than on‐shore wind technologies (figure 3). Coal emissions are
mainly released during combustion, but small quantities are associated with upstream activities such
as mining.
However, there is no “zero CO2 emission” electrical power source. CO2 emissions from renewables
and nuclear are concentrated in the fuel production and construction stages.
Power plants fueled by biomass (wood, agricultural crop wastes, livestock wastes, and methane
collected from municipal landfills) release CO2 emissions but they also can prevent even greater
releases of both CO2 and methane, especially in the case of combined heat and power generation
technologies.

Figure 3 – Life‐cycle assessment GHG emissions of various energy systems (2000)

Source: GEMIS database, Oeko Institute in European Environmental Agency (2008), Energy and
environment report

The inefficiency of the production and distribution of the electric power is another important factor
of C02 emissions. It is estimated that about two‐thirds of the primary energy that is converted to
produce electricity is lost as “waste” heat (IPCC, 2007) and 9% of electricity is lost in the transmission
and distribution phases. More worrying, the average global efficiency of traditional fossil‐fuelled
power generation has remained stagnant for decades at 35‐37% (IEA, 2008).
This trend is clearly not sustainable. The International Energy Agency (IEA) predicts that if no new
policies are undertaken, greenhouse gas emissions from electricity will continue to increase rapidly,1
contributing to an eventual global temperature increase of up to 6°C at the end of the century
(compared to pre‐industrial levels), well above the 2°C that the scientists consider as the upper limit
to avoid major disruptions of the climate system.

1
+45% by 2020 and + 60% by 2030 compared to 2006 levels.

5
According to the IPCC, preventing the planet warming from a further 2°C will require that global
greenhouse gases emissions peak by 2015 and be cut by 50% at least by 2050 compared to 1990
levels. It is therefore certain that in the medium run, we will have to find ways of satisfying our
electricity needs with near‐zero net emissions of greenhouse gases in order to avoid the worst
damage from climate change.

2. Other environmental and health and hazards associated with electricity

Besides releasing greenhouse gases, energy production causes substantial environmental and human
health damages which vary widely depending on where the activity takes place and on the type of
the activity. These damages include health effects from SO2, NOX, dust particles and radioactivity,
occupational health effects, health and environmental impact of serious accidents in nuclear life‐
cycle, impact of noise on health, water (both surface and ground) and soil contamination, impact on
natural resources and disruption to the ecosystem caused by removing the land from its normal use.
Most of those impacts are “external costs”, i.e. they are not incurred by those who generate them,
but by society as a whole. Therefore, they are not reflected in the market prices.
A European research project provides estimates of such external costs for Europe2 (figure 4). The
report points out that fossil‐based fuels (coal, crude oil and, to a lesser degree, natural gas) have the
highest external costs of any of the technologies used to generate electricity. Importantly, this
conclusion holds even for plants in the EU that are 'state of the art’. Combustion of coal at thermal
power plants emits mainly carbon dioxide (CO2), sulphur oxides (SOx), nitrogen oxides (NOx), CFCs,
other trace gases and air borne inorganic particulates, such as fly ash and suspended particulate
matter (SPM).
Renewable energies and nuclear energy cause less damage per unit of electricity, although the costs
related to serious nuclear accidents are not fully accounted for.
Wind has the lowest external costs. Nuclear and solar photovoltaics (PV) have roughly similar
external costs, with nuclear slightly lower, and both are lower than biomass and gas. The hydro
figures have a wide spread between the highest and lowest values, reflecting the very site‐specific
nature of the impacts from hydropower mainly from dams.
An important conclusion of the research is that if the external cost of producing electricity from coal
were to be factored into electricity bills, between 2 and 7 cents per kWh would have to be added to
the current price of electricity in the majority of EU Member States.
Although those figures reflect the technologies that are operated in Europe, it is very likely that the
main conclusion – coal‐based technologies have the highest external costs‐ holds true for the rest of
the world. Indeed, the ILO, UNEP, ITUC Green job report stresses that coal mining remains a
dangerous and unhealthy occupation for many workers.

2
ExternE project (2003), Research results on socio-environmental damages due to electricity and
transport, brochure EUR 20198, European Commission, Directorate-General for Research

6
Figure 4 ‐ Estimated average EU external costs for electricity generation technologies in 2006

SOURCE: European Environmental Agency http://www.eea.europa.eu/es

3. Electricity systems’ vulnerability to climate change

As well as playing a leading role in causing global warming, the power sector could itself be
substantially affected by a change in the global climate, be it through rising sea levels, extreme
weather events or more frequent droughts. As we know that some warming is inevitable in the
decades to come, it is important to understand how energy systems will be affected and to develop
adaptive measures to reduce negative impacts and, whenever possible, take advantage of positive
consequences.
A study reveals that over 90% of global electric utilities recognise they are at risk from changes in
climate and water availability, which are already adding stress to the sector. However, less than a
third claimed to undertake any financial or quantified evaluation to the impact of climate change on
their business (Acclimatise, 2009).
The IPCC notes that climate change will affect all types of electrical production —from coal‐fired
power plants to renewable energies such as hydroelectric power or wind — but not in the same way.
Not all consequences are negative. Some changes may be beneficial for power production.
The vulnerability to climate change will vary greatly depending across regions and local conditions.
However, we can identify those infrastructure that will be impacted in the very short run (or are
already affected by early consequences of climate change):
Sea level increase could affect power plants in coastal and river flood plains. The coastal population
could grow from 1.2 billion people (in 1990) to between 1.8 billion and 5.2 billion people by the
2080s, leading to a great number of new power plants to be built in the surroundings. The capacity of
these facilities to recover from extreme weather events might be extremely weak, lacking even
insurance to replace equipment or improve damaged infrastructure.
Extreme weather events such as tropical cyclones, storm surge, ice storms or heavy rains, could
damage power plants and electricity transmission infrastructure, which could in turn lead to power
cuts, affecting other sectors of the economy (e.g. water and wastewater pumping stations) and
impeding the emergency response to an extreme event. Also, in developing countries, a common
cause of death associated with extreme weather events in urban areas is electrocution by fallen
power cables (Few et al., 2004).

7
Where rivers provide cooling water, reduced rainfall and lower river levels may force thermal power
plants to operate at a reduced capacity and in a suboptimal efficiency regime (e.g. because of an
increased demand for energy needed for pumps to maintain the desired condensing temperature,
changes from wet to dry cooling towers, etc). Reduced stream flows are expected to jeopardise
hydropower production in some areas, whereas greater stream flows, depending on their timing,
might be beneficial in certain areas.
Changed conditions can affect positively and negatively biomass, windpower or solar energy
production. Changes in climate could alter the locations where these weather‐based energy sources
are available (Electric Power Research Institute, 2008).
On the demand side, where the climate warms due to climate change, less heating will be needed for
industrial, commercial and residential buildings, and cooling demand will increase, with changes
varying by region and by season. In some cases, due to infrastructure limitations, peak demand could
go beyond the maximum capacity of the transmission system.

B. The Social dimension

Solutions to climate change have to come to grips with the reality of lack of access to modern forms
of energy for billions of people and large disparities in the levels of consumption of energy across the
world. For the billions of people struggling with energy poverty, access to clean, and affordable
energy services is a higher and more immediate priority than climate change.
There are 1.6 billion people in the world who have no access to electricity, 80% of whom live in rural
areas. In South Asia only 40% of the population have electricity, and in sub‐Saharan Africa the
electrification rate is only 22,6%.
There are two separate challenges here: the challenge of providing basic energy needs to the rural
poor, especially in the developing countries, most of whom are not connected to any grid, and the
challenge of the ‘energy‐poor’ that can be found also in developed countries.
Communities in remote rural areas rely heavily on petroleum products for lighting, appliances and
water irrigation, and face high and fluctuating prices. Also, where vehicle batteries are used as a
power source for lighting, families may have to travel long distances and wait long times for their
batteries to be recharged at commercial centers. Some 2 billion people use solid fuels (biomass and
coal) for cooking and heating in simple devices that produce large amounts of air pollution.
Harvesting of wood for use as fuel also has contributed to the problem of deforestation and
desertification.

While possibilities for grid extension still exist in developing countries3, in many rural areas, it would
be extremely costly and populations are too dispersed for conventional distribution. The
International Energy Agency estimates that over the next thirty years, investment in new power
generating capacity will amount to US$2.1 trillion, but this will still leave 1.4 billion people with no
grid connection. Much of this investment will be focused on electrification in urban areas. The IEA
admits that private utilities will not extend networks to areas where it is unprofitable, unless the
governments provide subsidies to meet the costs.

3
On the other hand, In Sri Lanka, only 55% of the population are served by grid electricity, whereas it
is estimated that about 80% could reasonably be served by grid extension

8
In urban areas, electricity grids are commonplace, but in some regions, notably Africa and South Asia,
more than 30% of urban population, primarily the slum dwellings, have no access to electricity. Their
inhabitants resort to the use of charcoal and kerosene, batteries or to illegal electricity tapping. They
usually spend a higher percentage of their income as do households who use electricity, with high
costs in terms of access to basic education and health public services, health and reliability (voltage
surges, blackouts resulting in damage to household equipment) (UN‐Habitat).
In developed countries, millions of households live in fuel poverty, meaning they have to spend more
than 10% of their revenues on total fuel use to heat their homes to an adequate standard of warmth.
Fuel poverty is caused by a combination of poor energy efficiency of the housing, high electricity and
gas prices and low income, and is indirectly linked to the deregulation of the electricity sector. Fuel
poverty has been recognized as a problem in most developed countries, be they with cold or warm
climates, as in Australia. In the UK and New‐Zealand, it is estimated that between 10% and 14% of
the total households live in fuel poverty.
A key issue is to what extent solutions to provide access to energy to those who currently lack it is
compatible with a reduction of 50% of global greenhouse gas emission in 2005 as recommended by
the IPCC. The UNFCCC (United framework convention on climate change) recognizes the right for
developing countries to increase their emissions as they strive for economic growth and a better
quality of life4. In parallel, developed countries, which are mostly responsible for climate change,
should reduce their emissions by a bigger proportion so as to leave space for developing countries to
increase their emissions as they develop. However, models show that even if developed countries’
emissions were moved close to zero, this would not be enough to reduce global emissions at the
level required (Stern, 2008). This implies that developed countries should as well slow down their
emissions and rapidly start to reduce them. In this context of “scarce emissions rights”, the needs of
the energy poor might be viewed as competing with other, less essential needs such as commerce,
transport, or mining.

C. The reliability dimension

A reliable supply of electricity is key to social and economic development. Reliability has many faces.
Where oil and gas are an important part of electricity generation, peaks in electricity prices can arise
from volatility of international oil and gas prices, political instability in producing countries and
growth in demand from rapidly developing countries. The surge in prices in recent years culminating
in the price spike of 2008, coupled with much greater short‐term price volatility, have affected the
balance of payment, economic development and food security of most developing countries.
Over the mid‐ and long‐term, energy security is linked to the size and availability of the reserves of
world fossil fuels. Reserves from coal are particularly important for the climate change debate. Coal
is often assumed to remain the mainstay of power generation even in a carbon constrained world,
because it is cheap and abundant, notably in the US and China. Recent surveys however suggest that

4
The Convention strongly affirms the rights of all countries to pursue sustainable development (article
3.4) and makes repeated references to the principle of common but differentiated responsibility (e.g.,
article 4.1). This principle recognises historical differences in the contributions of developed and
developing States to global environmental problems, and differences in their respective economic and
technical capacity to tackle these problems.

9
the peak of usable coal production may actually occur earlier, some say in less than two decades away5. Their
main points are that estimates for global coal resources have been consistently revised down over the
past 25 years and the quality of produced coal is declining. The future of coal as a major source of power
generation becomes an open question. It raises the question of whether to proceed with very
expensive carbon sequestration at coal fired electrical generating stations or to put the resources
into increasing the production of power from renewable sources.
A central element of security of supply involves the reliability of the grid. As electricity cannot be
stored, power supplies need to be constantly balanced with demand. In a carbon constrained world,
the power system will have to ensure stability while accommodating a growing share of intermittent
renewable and decentralized generation. It will also have to be more efficient to reduce energy
demand. There is evidence that ‘smart electricity grids’ coupled with aggressive energy efficiency
measures can reduce the need for new power station investment needed to cover the peak
consumption.

Key points
- Without reductions in demand, electricity consumption will continue to grow at 2,5% per annum,
placing huge stress on the existing infrastructure and workforce and the environment. The power
sector would more than double its CO2 emissions by 2030, contributing to pushing up global
temperature by as much as 6°C in the long term – far above the 2°C limit the IPCC says is
essential to avoid the most dangerous and irreversible effects of climate change. The electricity
sector will be central to curbing emissions.
- Among the different energy sources, coal has the highest greenhouse gas emissions and external
costs. However, no energy is without greenhouse gas emission. The renewable sources have the
lowest intensity of carbon emissions and are also indigenous resources.
- Although the general consensus view on coal supplies has long been that we have hundreds of
years of coal left, and that oil and gas depletion are the pressing concerns, recent surveys have
raised questions over whether the 'peak coal' might occur earlier than we thought.
- Ensuring basic access to environmentally friendly, secure energy for the people currently
deprived should remain a priority for developing countries that will consider how to control their
CO2 emissions.
- Renewable energies and energy efficiency measures will require profound adaptation of the
national electricity grids.
- Even if global warming is controlled and kept moderate, it will affect the power sector through
losses in infrastructure, constraint on production and countervailing trends in demand. Impacts
will differ from regions and location, but all energy sources are potentially affected.

5
See Heinberg (2009), Energy watch group in Germany (2009), US EIA (2009).

10
II. Scenarios for a sustainable energy future: a low‐carbon, sustainable electricity
sector is possible

A number of scenarios have been developed to explore which new technologies will be most
important to achieve a low‐carbon energy future, and what it would imply for energy demand, the
energy mix, investment and sustainability in the energy field. Such approaches can provide valuable
insight to trade unions and other actors to identify the actions that must be taken and conditions
that must be created at certain points in time in order to make the scenario possible. Obviously, the
future will not look exactly like the ones envisioned: other priorities will intercede, and national
conditions and circumstances will dictate the specifics of the energy policies that may be adopted. In
this section, we compare two of these scenarios, and identify their convergences and divergences on
energy technologies, investment, universal access to energy and energy security.

A. The IEA and Greenpeace low‐carbon scenarios: key assumptions

The World Energy Outlook 2008 and the Energy [R]evolution scenario developed respectively by the
International Energy Agency (IEA) and by Greenpeace are both consistent with climate change
science as they assume that governments take action to reverse current trends so that global
greenhouse gas emissions are halved in 2050 (see box 1).

Box1: Scenarios to achieve a 50% reduction in world greenhouse gas emissions by 2050
The IEA World energy Outlook 2008, based on the World Technology Perspectives 2050, provides the
most widely used of the climate/energy scenarios. The IEA compares a “business as usual” scenario,
where emissions continue to grow as no new policies are undertaken, and a “Blue map” scenario
corresponding to long term stabilization of greenhouse gas concentrations at 450 parts per million of
CO2 equivalent. The Blue map scenario assumes a fast deployment of both renewables for power
generation and technologies for carbon capture and sequestration.
http://www.iea.org/weo/2008.asp
The Greenpeace Energy [R]evolution scenario assumes a nine‐fold increase in renewable energy
combined with massive energy efficiency measures, allowing for the replacing of nuclear and a
proportion of coal‐fired power. This scenario excludes so‐called ‘CO2‐free coal power plants’, which
are not considered CO2 free and would create another burden in trying to store the gas under the
surface of the Earth with unknown consequences. For multiple safety and environmental reasons,
nuclear energy is also excluded. The energy [R]evolution scenario is compared to the IEA Business‐as‐
usual scenario.
Energy (R)evolution scenarios have also been developed for 10 global regions, including China, East
Asia, South Asia, Latin America, Europe, North America, OECD Pacific and Africa.
http://www.energyblueprint.info/regionalscenarios.0.html?PHPSESSID=a138b7a2f0d67c559a77de125
d74a0f4

11
 B. Both scenarios agree that energy conservation, rapid switching to renewable, grid
improvements and phasing out of conventional coal power plants are essential elements of
the transition to a low carbon power sector

Major improvement in energy efficiency is the most important source of emission reductions.
Significant energy savings are possible at no additional cost, or could even lead to financial savings
for consumers. Although the highest potential for energy savings lies in final consumers (buildings,
appliances, lighting, etc…), improvements in the power sector itself, through the use of more
efficient plants and networks, can achieve 10% of the required emission reduction in the sector. It
has to be noted that the Greenpeace scenario assumes a much stronger effort to control energy
demand as achieving a significant share of renewable energy sources and phasing out of nuclear
energy would be hard to achieve at a reasonable cost if energy consumption continues to grow.
As a result of energy savings, total electricity consumption is expected to grow less rapidly than if
no action were taken to curb emissions. This is despite the expansion of electricity use in the
transport sector, by electric vehicles and plug‐in hybrids, as well as in industry (electric arc furnaces)
and other sectors.
A major decarbonisation of the power sector is required by 2050. In other words, the majority of
the power will have to come from energy sources that emit close‐to‐zero CO2 emissions. This
requires substantial changes in the electricity generation technologies portfolio. Both scenarios deem
it technologically feasible as required technologies either already exist or are at an advanced stage of
development.
The energy mix will have to rapidly switch to renewables sources (hydropower, biomass, wind,
photovoltaics, concentrating solar power, geothermal, tidal and wave, methane from landfills, etc…).
Both scenarios foresee a considerable increase in power generation from renewable sources, whose
share of total electricity generation will rise from 18% in 2006 to either 40% (IEA) or 50%
(Greenpeace) in 2030. Wind and biomass are already competitive against fossil based electricity
generation; others such as PV will soon be competitive, thanks to the introduction of a carbon price
in developed countries.
Decentralised generation (DG) ‐ production of electricity close to where it is used‐ is widely
developed. DG is connected to a local distribution network system, supplying homes and offices,
rather than the high voltage transmission system. The proximity of electricity generating plant to
consumers allows any waste heat from combustion processes to be piped to buildings nearby, a
system known as cogeneration or Combined Heat and Power (CHP). DG also includes stand‐alone
systems entirely separate from the public networks, for example heat pumps, solar thermal panels or
biomass heating. CHP development will be central to provide electricity to those who are currently
lacking acessed.
Gas‐fired power stations remain important in the energy mix in both IEA and Greenpeace scenarios
as they are better suited to balancing out the variations in supply from renewable energy sources
than nuclear and coal.
Both IEA and Greenpeace scenarios underline the need for modifying the energy systems to
accommodate the significantly higher shares of renewable energy. A combination of smart grids,
energy storage and electricity demand management will be able to optimise the energy system as a
whole, thus saving CO2 emissions by reducing the need for part‐load thermal plants to meet reserve
requirements.

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- “Smart electric grids” or “virtual power stations” will enable an active integration of consumers
and decentralised power generators and thus realise real time two‐way power and information
flows to intelligently optimise the overall power station activity. Some public utilities already use
such systems, integrating cogeneration plants, wind farms, photovoltaic systems and other
power plants. Large power stations will feed electricity into the high voltage grid but small
decentralised systems will deliver their power into the low or medium voltage grid.
- The IEA scenario predicts a growth of energy storage capacity from 100 GW to 500 GW.There are
a number of technologies now emerging that are able to store electricity on a sufficient scale,
among which Pumped Hydro Storage, Compressed Air Energy Storage, battery storage and flow
cells.
- Electricity demand management is a technique allowing consumers to switch their consumption
across time depending on the price of electricity on the market, notably through the use of
‘smart meters’ for reducing peak demand.

Both scenarios highlight that the share of conventional coal plants in the power energy mix must
sharply decrease and that this implies that a proportion of the existing coal power plants – at least
the less efficient ones‐ will have to be shut down before the end of their technical life time. This
stems notably from the fact that the rate of capital‐stock turnover is particularly slow in the power
sector. IEA foresees that one‐third of all coal‐fired power plants not suitable for CCS will need to
close before the end of their technical life in developed countries between 2020 and 2030. Given the
ageing power plant fleet in those countries, the cost of early retirement can be limited if the phasing
out occurs in the next 15 years.6 The phasing out of the less efficient coal plants should take place
also in the emerging countries which are expected to build massive new coal capacities in the next
decade. Both the IEA and Greenpeace acknowledge that it represents a challenge for those
countries, and call for significant new public financing from industrialized countries to support the
building of capacity in developing countries.

C.The major divergences relate to the role of CCS and nuclear.

Carbon Capture and Sequestration (CCS)

The IEA analysis suggests that, in addition to wide scale deployment of high‐efficiency
ultrasupercritical and integrated gasification combined‐cycle coal plants, Carbon Capture and Storage
(CCS) will be an option in a number of countries that might be either reluctant to develop the nuclear
option, to bear the costs of higher shares of renewable (or deal with intermittence problems) or to
give up abundant and cheap coal resources. Under the IEA scenario, CCS technology is assumed to
be available around 2020, and all new fossil‐fuel plants built in the developed countries after 2020
and 32% of new fossil‐fuel power plants in emerging countries are fitted with CCS. CCS capacity
represents 363 GW in 2030. Thermal plants with CCS produce 8% of total electricity generation in
2030. All coal‐fired power generation will incorporate CCS in 2050. However, the IEA underlines that
this requires substantial increase in R&D efforts to develop CCS technologies as they are not

6
40% of the plant stock is now over 30 years old and most importantly, over half of coal-fired capacity
is older than 30 years.

13
currently commercially available, and in any case, there is a real chance that some of these
technological breakthroughs will not materialize.

Echoing this last point, Greenpeace’s report argues that CCS could only become reality in 15 years at
the earliest. This means it will not make any substantial contribution towards protecting the climate
until the year 2020 at the earliest whereas the science tells that emissions must peak in 2015 and be
halved in 2050. If CCS does become available in 2020, most of the world’s new power plants will have
just finished being modernized, and retrofitting existing power plants with CCS would be very
expensive. Greenpeace also points to the additional cost of CCS, which the IPCC special report on
CCS7 has estimated to between 3.5 and 5.0 cents/kWh of power.

By contrast, the Greenpeace scenario features a dramatic shift away from existing fossil‐fuel
technologies as no “clean coal” technology is used. The rationale is that renewable energy sources
are already available, in many cases cheaper, and without the negative environmental impacts that
are associated with fossil fuel exploitation, transport and processing. Since the average lifetime of a
coal fired power plants is about 40 years, in order to achieve the required emissions reduction, the
construction of new coal power stations must end across most of the world by 2015 and in
developing countries by 2020.
This view is supported by J. Hansen, director of the NASA Goddard Institute for Space Studies, and
IPCC‐linked climate scientists in an article co‐written in 20088. Warning that there is less time than
previously thought to reduce greenhouse gases emissions if we are to preserve nature and humanity,
the authors call for a moratorium and phase‐out of coal plants that do not capture and store CO2
over the next 20‐25 years. Meanwhile, energy efficiency, renewable energies, and an improved grid
should be given priority as the authors are convinced they could provide all of our electric power
requirements. However, as coal might be still used in China and India, and all‐renewable generation
might fail, R&D programs in both next generation nuclear power and Carbon Capture and
Sequestration must be urgently undertaken. However, in their reasoning, research in CCS and
nuclear is conceived more as an insurance than as a necessary element of the energy mix. The article
mentions the possibility that coal is left in the ground while CCS is used for other fuels, for instance
biofuels.

Nuclear
The IEA scenario assumes a massive expansion of nuclear power between now and 2050, with
installed capacity increasing four‐fold. In order to achieve this, 32 large reactors (1,000 MWe) would
have to be built every year from now until 2050 and license of existing plants extended over the
period 2006‐2030. Still, the share of nuclear power in electricity generation increases only slightly
(18% in 2030, compared with 15% today). Greenpeace’s report deems this scenario impossible given

7
IPCC (2005), Special Report on Carbon Dioxide Capture and Storage.
http://www.ipcc.ch/pdf/special-reports/srccs/srccs_summaryforpolicymakers.pdf
8
J. Hansen, M. Sato, P. Kharecha, D. Beerling, R. Berner, V. Masson-Delmotte, M. Pagani, M.
Raymo, D. L. Royer, J. C. Zachos (2008), Target atmospheric CO2: Where should humanity aim?,
Open Atmospheric Science Journal - Letter to B. Obama, Tell Barack Obama the Truth – The Whole
Truth, available at http://www2.grist.org/gristmill/images/user/8/20081229_Obama_revised.pdf

14
the technical limitations (the last decade average was only 17 GW annually), the underestimation of
the cost ($2100/kWe installed instead of $7,000/kWe) and the hazards related to reactor safety,
nuclear proliferation and nuclear waste disposal, especially given the fact that a large proportion of
the new reactors would need to be built in non OECD countries. They also argue that the time
needed between the decision to build a reactor and the delivery of its first electricity (10years)
means that contribution from nuclear power towards reducing emissions would come too late to
help.

D. Substantial additional investment are needed under both scenarios

Under both scenarios, substantial net additional investments (USD 3.6 trillion in power plants over
the period 2010‐2030) in power generation are required relative to the business as usual scenario to
fulfill the objectives.
In addition, investment in transmission and distribution will be huge, as renewable production is
often in remote areas and must be connected to the grid.
It is from developing countries that much of the expansion of renewable energy supply is expected,
due notably to cost reductions resulting from learning spillover effects from developed countries. In
2030, 40% of the renewable electricity generation in the world is expected to be in the emerging
countries.
In the Greenpeace scenario, 80% of investment in new power plants goes to renewable energy. The
installed capacity of renewable energy technologies will grow from the current 1,000 GW to 9,100
GW in 2050. Investment in fossil fuel power is focused mainly on combined heat and power and
efficient gas‐fired power plants.
By contrast, the IEA scenario foresees $1,5trillion for CCS, $1,4 trillion for renewable, $800 billion for
advanced coal technologies and $750 billion for nuclear over the period from 2010 to 2050.

E. Implications for sustainability

Both the IEA and Greenpeace describe an energy transition that makes it possible to significantly
reduce CO2 emissions from the power sector while enhancing access to energy in developing
countries, combating energy poverty and strengthening energy security.

Universal access to electricity

In a previous scenario work, the IEA underscored that the income growth rates assumed by the
sustainable scenario for developing countries should provide sufficient resources to accommodate at
least the basic energy needs of the population of these countries (IEA, 2003). Urbanisation trends will
make it easier to provide a growing population with access to the electricity grid. The IEA estimates
that if trends to electrification experienced in the last twenty years (at rates of 70 to 120 million
people gaining access to electricity every year) continue over the coming 50 years, 95% of the world
population could be provided access to electricity by 2050.
Greenpeace argues that the improvement of renewable energy technologies and of distributed
generation could provide a significant share of the remaining rural population with a local,
environment‐friendly supply of energy without building expensive transmission infrastructure.
Renewable energy, in particular small hydropower, biomass and solar PV, is already providing

15
electricity, heat, motive power and water pumping for tens of millions of people in rural areas of
developing countries, serving agriculture, small industry, homes and schools. Those technologies
have the advantage of enabling the community’s participation in designing, building and maintaining
the project.
Finally, the reduction of energy poverty notably in the developed countries could benefit from the
energy efficiency measures, as a key element in reducing fuel poverty is to improve the energy
efficiency of housing and appliances.

Energy security
According to the IEA scenario, actions to fight climate change yields energy security benefits and
substantially reduced imports bills for most importing countries and regions. The cumulative saving
on energy bills over the period 2010‐2030 amounts to $5.8 trillion. The shares of coal and gas as fuel
for power and heat plants in 2030 decline to 47%. This contributes to the security of the electricity
sector, making the sector in many countries less import‐dependent. Also, significant improvements in
the energy efficiency of electricity end uses alleviates the pressure on building more capacity in the
next two decades.
Renewable energy technologies and CHP can be part of a strategy by local communities and local
authorities to gain energy self‐sufficiency and protect from the fluctuations of the oil and gas market.
The Australian Service Union (ASU), notes that local government depots and offices –especially the
smaller and decentralized facilities‐ could be fitted with small solar and wind turbines whose power,
when not utilized directly, could be fed back to the grid (ASU, 2009). Electricity generated from
methane collected from local government waste treatment plants could also from part of this new
energy self‐sufficiency. For larger government depots that collect and recover green waste, carbon
neutral bio‐energy plants are also an option.
Both scenarios address the issue of stability of the grid but in different ways. Under the IEA scenario,
grid stabilisation is achieved assuming that fossil + CCS, nuclear and hydro provides for base load (55‐
69% of production) and electricity storage capacities and gas backup capacity (900 GW) are available.
Under Greenpeace’s Energy [R]evolution scenario, biomass, hydro and CSP9 with efficient heat
storage together with a reduced number of fossil fuel power plants, allow for grid stabilization. The
electricity production of solar panels tends to coincide with peak times of electricity demand. Instead
of building a new power plant, or turning on costly and polluting auxiliary plants, utilities can partially
meet peak load with the distributed solar systems.
CHP provides benefits by use of local and surplus energy resources (particularly through the use of
waste, biomass, and geothermal resources in district heating/cooling systems).

9
Concentrating solar thermal power (CSP) plants work indirectly by focusing light onto a collector
which is then used to heat a fluid, generating steam to drive a turbine. They have the advantage of
being able to store energy in the form of heat and thus smooth out some of the fluctuations due to
intermittent solar influx.

16
Case study 1: Successful integration of decentralized energy in Denmark
Several OECD countries have demonstrated that it is possible to smoothly integrate a large
proportion of decentralised energy, including variable sources such as wind. A good example is
Denmark, which has the highest percentage of combined heat and power generation and wind
power in Europe. With strong political support, 50% of electricity and 80% of district heat is now
supplied by cogeneration plants. Renewable energy accounts for 28% of electricity supply, with 3,150
MW of installed wind energy capacity, of which 420 MW are offshore wind turbines. At certain times,
electricity generation from cogeneration and wind turbines even exceeds demand. The load
compensation required for grid stability is managed both through regulating the capacity of the few
large power stations and through import and export to neighboring countries. A three tier tariff
system enables balancing of power generation from the decentralised power plants with electricity
consumption on a daily basis.

F. Avoiding high risks technological fixes

Both the IEA (2003) and Greenpeace insist that unless a balanced portfolio of strategies is used in
pursuing specific goals of climate change mitigation, energy security and environmental protection,
some perverse effects could result.
For example, there is a clear risk of increasing the world’s dependence on natural gas – and a
concomitant increase in security of supply risks with respect to this source – if we seek too rapidly to
limit dependence on oil.
The IEA points to the risk of pursuing climate change goals through technological paths that lead to a
worsening of the problem. Carbon capture and sequestration could lead to higher energy use, and
possibly to higher carbon emissions. This echoes the UNEP‐ILO‐ITUC report statement that “ instead
of being a pragmatic measure for dealing with carbon emissions from existing plants, CCS may well
tempt governments, businesses, and labor unions toward an even greater commitment to coal, even
though CCS is unlikely to create many jobs. This temptation is reinforced by the fact that captured
CO2, if injected into oil and gas wells, can be used to squeeze more of these resources out of the
ground”.
This could happen if, to solve the problem of CO2 emission reduction in transport or in other sectors
we resort to massive scale hydrogen production from fossil fuels: hydrogen could well be "another
expensive way to burn more coal".
Significant undesirable environmental and security impacts for future generations could also result
from massive production of energy from nuclear fission technologies. These risks need to be carefully
examined and kept under control both through technological approaches and political approaches.
Interestingly, the IEA stresses that the only "risk‐free" option is efficiency improvements in energy
production and use – which we thus conclude should be promoted as much as possible, while
seeking to limit the rebound effects from efficiency gains.

Key points
- A major decarbonisation of the power sector must be achieved by 2050. Energy efficiency in
energy use and production should be exploited as much as possible, as it lowers the cost of

17
 expanding new low‐carbon energy technologies and does not entail new risks for the
environment and the society.
- Together with energy conservation, major switching to renewables and grid improvements can
provide most of the emissions reduction needed. Current technologies are in many cases
adequate to the task, and where new technologies are required, they are in many cases already
at an advanced stage of development. Moving those technologies to the commercial stage will
require scaled‐up research and development.
- Since coal power stations have very long lifetimes, a significant share of coal power plants –
starting with the less efficient ones‐ will have to be phased out in the next decade. Moreover,
new evidence that global warming is accelerating faster than had been forecast by the IPCC calls
for a moratorium on new coal‐fired power plants that do not capture and store CO2. Since there
are no full-scale coal power plants with CCS today, this means that no new coal‐fired power
plants should be built today.
- R&D programs in both next generation nuclear power and Carbon Capture and Sequestration
(CCS) must be undertaken as an assurance in case of failure of solutions based on renewable and
energy efficiency to stabilize the climate.
- It is possible to achieve, simultaneously, stringent goals for climate change mitigation, universal
access to energy and energy security if our societies accept the inevitable cost and address the
social implications. Attention should be paid however to avoid high risk technological fixes that
could worsen the problem.
- The improvement of renewable energy technologies and of distributed generation could provide
a significant share of the rural population in developing countries currently without access to
electricity with a local, environment‐friendly and community‐owned supply of energy without
building expensive transmission infrastructure to bring electricity to remote areas.

18
III. The employment consequences of climate change mitigation in the power sector

The purpose of this section is to examine the implications of the transition to a low‐carbon energy
economy for work and employment at worldwide level, with a focus on the sectors organized by PSI
affiliates, i.e. the electricity generation, transmission and distribution and local authorities.
The first section focuses on methodological issues. The second section presents employment
projections for the whole power sector, including manufacturing. The challenge for jobs in the coal
power sector is addressed in the third section. The fourth section outlines the opportunity for new
jobs for PSI’s affiliates. Finally, the fifth section looks into the quality of the new jobs created in the
low carbon power sector.
A. Understanding the likely effects of climate change mitigation on jobs
With policies to cut greenhouse gas emissions being considered in most developed countries, the
implications for employment are gaining an increased attention both from trade unions and
governments. On the one hand, concerns have risen about the potential negative consequences on
jobs in carbon intensive sectors such as coal electricity production, road transport, steel, cement,
etc… On the other hand, the potential for creation of millions of new jobs in the renewable and
energy efficiency sectors has been highlighted.
We draw upon the findings of the very few studies that have looked into the link between
employment and climate change policies at worldwide level: the UNEP, ILO and ITUC “Green jobs”
report10 and the Greenpeace‐EREC study “Working for the climate ‐ Renewable energy and the green
job [R]evolution”11. This last study looks at how many jobs will be created and lost in power
generation and electrical efficiency under the Energy [R]evolution scenario described in the previous
chapter, and how many compared to business‐as‐usual (BAU), with little or no action to avert climate
change. Insights from the study carried out for the European Trade Union Confederation by Syndex
et al.12 help interpreting the results of the Greenpeace study (see box 2).
It has to be noted that, in order to have a comprehensive picture of the relationship between climate
change and employment in the power sector, additional research would be required in two areas.
Firstly, we need to understand how employment would be affected if no action to tackle climate
change were taken. This would be helpful in considering the cost and benefit of the climate change
policy. Jobs in the power sector will be affected among other things by damages to infrastructure,
reduction of production capacity due to changing weather conditions and countervailing trends, as
warmer winters reduce the need for heating, yet hotter summers increase demand for cooling.
Secondly, research should be undertaken to understand how efforts to adapt to the unavoidable
effects of climate change in coming years and decades will impact employment in the power sector.
For instance, additional employment is likely to be needed to enhance the resilience of infrastructure
to extreme weather events.

10
UNEP, ILO, ITUC, IEO (2008)
11
RUTOVITZ J. et al (2009); Greenpeace, EREC (2009).
12
ETUC et al, (2009). This study compares employment projections in the electricity production
based on two scenarios elaborated by the European commission: a Business‐as‐usual scenario and a
scenario N‐SAT which is consistent with the EU target of reducing by 20% CO2 emissions reduction by
2020.

19
 B. The impact of measures to cut CO2 emissions on global employment in the power sector,
including manufacturing, generation and distribution

Firstly, the net overall impact on jobs of carbon reduction measures in the energy sector is positive
over the period considered (in general 2000‐2020 or 2030). Greenpeace’s study estimates that 2
million more jobs than now could be created by a nine‐fold increase in renewable and strong energy
efficiency improvements. For the EU, global employment in power plants operation is expected to be
6% higher than without carbon constraint in 2030. This is related to the fact that renewable energies
energy efficiency are more labour intensive than the fossil fuel sector. In other words, there are more
jobs created in the renewable power sector than there are jobs lost in the fossil fuel sector, over
time.
A comparaison of employment factors13 for renewable and fossil fuel electricity technologies (Table
1) shows that renewable energy creates more jobs per megawatt than fossil fuels power plants. In
addition, in non oil producing countries, renewable and energy efficiency have a greater domestic
content, hence create more local jobs compared to the oil industry. The UNEP, ILO, ITUC and IEO
green jobs report shows that there are already more jobs in renewable energy worldwide than in the
oil and gas industries.
Table 1. Estimated Employment per Megawatt, Renewable and Fossil Fuel Power Plants
Average Employment over Life of Facility (Jobs per MgW of average capacity)
Manufacturing,construction, Operations & Maintenance/ Total
Installation Fuel Processing
Solar PV 5.76–6.21 1.20–4.80 6.96–11.01
Wind power 0.43–2.51 0.27 ( 0.7 in Greenpeace) 0.70–2.78
Biomass 0.40 ‐ 0.38 2.44 0.78–2.84
Coal‐fired 0.27 0.74* 1.01
Natural gas‐fired 0.25 0.70 0.95
Nuclear 0.30 0.32
Source: UNEP, ILO, ITUC, IEO, (2008;) Nuclear figures: Greenpeace (2009)
* The job intensity of coal production is negligible, around 0.39 job per gigawatt (Greenpeace, 2009).

Secondly, employment effects vary greatly across the power technologies, with massive job creation
in the renewables and energy efficiency sectors, and a drastic drop in jobs associated with oil and
coal generation.
• Employment in the renewable energy sector increases threefold between 2010 and 2030. 4
million jobs are created, mainly in construction and manufacturing stages (table 2). Wind power
employment grows the most, and has the highest number of direct jobs. Renewable CHP
(mostly biomass) has the next highest employment by 2030, closely followed by solar PV (Case
study 2 below shows the successful deployment of renewable energy in Germany).

13
An employment factor indicates how many jobs are required per unit of electrical capacity. It takes
into account jobs in manufacturing, construction, operation and maintenance and fuel.

20
 • As a result of both early retirement of coal‐fired power stations and lower electricity demand,
jobs in coal are cut by 50% in 2020 and 60% in 2030 compared to current level of employment
(equivalent to a drop by 3 million jobs in 2030). This includes jobs both in coal generation and
coal mines. However, it is important to note that job losses compared to business as usual is
much less, as jobs would have been lost in the coal sector without climate abatement measures
(see below). For the European Union, jobs in coal and coal mining drop by only 15% in 2030, as
less coal‐phasing out is assumed and coal‐intensity of electricity is lower than the world
average.
• As gas plays an important role as a transition fuel (to provide the flexible reserve power that is
necessary to accommodate renewable), jobs linked to gas are not affected by carbon
constraints. They are projected to continue to grow at the same pace as business‐as‐usual
trends 2030. However, they start declining as from 2030.
• Oil and diesel jobs drop quite sharply, as a result of reduced dependence on the volatile oil
markets. Jobs in 2030 would be about 90,000, around 40% less than without the measures to
curb emissions.
• For nuclear employment, a sharp decline is foreseen as annual investment would drop to zero
by 2030. It is interesting to note that the projection for the European Union also foresees a
reduction in nuclear employment although nuclear is maintained in the energy mix. In fact,
carbon constraints would only slow the decline in nuclear employment without reversing the
downward trend.
• The focus on energy conservation opens up significant market opportunities in utilities for the
provision of demand management services to domestic and industrial users. New jobs will
result in energy efficiency improvements, notably in the smart grids and energy services. The
Greenpeace study estimates those jobs to grow to 700 000 jobs in 2020 and 1 million in 2030.
For example, a recent analysis of grid management jobs associated with ‘Intelligent Grid’
operation estimated 280,000 new jobs created in the US during the implementation phase
(Kema, 2008).

Table 2: Jobs in the renewable energy, in 2030

Renewable Employment in 2030 % in construction and
(million of jobs) manufacturing
Wind power 2,1 70%
Renewable CHP 2 majority
Solar PV 1,59 87%
Concentrating solar 0,22
power
Wave and tide 0,010
Geothermal 0,06
Source: Greenpeace (2009)

Thirdly, employment in fossil fuels will diminish in the future even if no climate change action is
taken. A key insight of the Greenpeace study is that, even without carbon constraints, jobs in coal
generation would go down by more than a third by 2020 despite 40% more generation. Employment
in mining, construction and manufacturing and operation and maintenance would drop from 4,2

21
million in 2010 to 2,6 million in 2030. The main reason for this is labour productivity increases in
electricity generation, especially in China following strong projected increase in GDP per capita. This
assumption should be discussed, notably in light of the restructuring that has affected the electricity
sector in most developed countries in the past decade. The ILO, UNEP and ITUC study also mentions
that modern plants in China employ very few workers: one in southern China near the Vietnamese
border needs just 270 workers for a 1,200 megawatt facility (compared with older plants that employ
up to 1,000 people in a 50 or 100 megawatt facility).
If this assumption holds true, doing nothing means we will see significant losses in employment in
the fossil fuel sector, and there will not be an expansion in clean energy production to compensate.
Finally, the positive employment effect might vanish as economies of scale in renewables increase
and investment in new capacities slows down or stops. This results from the fact that, in comparison
with fossil fuel power plants, renewable energy source generates more jobs at the manufacturing,
construction and installation stage, and fewer jobs in operation, maintenance and fuel processing.
Also, renewables, except biomass, employ more people in the construction and manufacturing
phases than in the maintenance and operation phases. It implies that the positive effect associated
with investment in renewables will progressively vanish as economies of scale increase and
investment slows down or stops. The employment effects associated with lower labour intensity in
operation and maintenance will be predominant and will have negative impact.

C. Challenges for jobs in the coal power sector

The main challenge of the de‐carbonisation scenario is the contraction of employment in the coal‐
fired plants and coal mining sectors. Energy savings might also have an effect on jobs in the
distribution companies, as energy saving technologies such as smart metering replace labour
intensive jobs.
The prospect of a booming renewable energy sector provides opportunities for job creation in the
power companies. However, the decline in jobs in the coal sector cannot be easily offset by
employment growth in renewable as the occupation profiles related to operation and maintenance
in both renewable and fossil‐fuel power plants are quite distinct. Indeed, operating a wind farm
requires different skills than operating a coal fired power station. Geographic location of wind power
plants and coal or gas‐fired power plants are likely to differ a lot as well.
The prospect of CCS deployment has led some unions and governments to hope that such job losses
could be avoided. The ETUC study carried out for the European Union shows that the deployment of
CCS as from 2020 would allow jobs losses in conventional coal power plants to be partly offset by
new jobs in power plants equipped with CCS. About 10.000 jobs could be maintained in the coal
power plants in 2030, in addition to jobs that will be maintained in the mining sector. However, the
deployment of CCS does not reverse the decline in employment in coal production. Importantly, the
study highlights that most of the jobs induced by CCS are linked to the construction and building
sector, and the capture, sequestration and storage processes do not involve the same jobs as those
linked to electricity production. This raises the issue of jobs evolution and training for workers.
The impact of contraction in coal employment will be higher in the countries that rely heavily on coal
or have few opportunities for developing renewable production. In South Africa and Poland the share
of coal in power generation is above 90%. In China and Australia it is close to 80%, as in India, where
it is more than two‐thirds. Coal accounts for around half of electricity generation in the United States
and Germany, one‐third in the United Kingdom, one‐quarter in Japan and one‐sixth in Russia.

22
Finally, it is important to keep in mind that even without policies to curb emissions, the coal sector is
likely to undergo a steady decline in employment. This reinforces the need for transition measures to
assist those affected.

Case study 2: Employment in renewables in Germany is booming

Germany emerged as an early leader in the renewable energy industry, and created some of the first
jobs in the green power sector. The German share of renewable energy has jumped from 3.8% in
2000 to 9.8% in 2007 and 14.2% of its electricity was generated from renewable sources in 2007. The
German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety estimated
gross employment in renewable energy for 2008, as a result of the various encouragement policies.
They have found:
• There has been a marked increase in jobs in renewable energy, despite an economic crisis in late
2008.
• The gross estimate of jobs in renewable energy was 278,000 in 2008, up from 249,000 the year
before; a 12% increase.
• The total investment in renewable energy facilities in Germany was $17 (€13,1) billion, the
majority in solar PV and wind energy.
• Even taking the effects of the economic crisis into account the Ministry expects that the
renewable power sector will continue to grow, and by 2020 at least it should provide 400,000
jobs in Germany.

D. The quality of the jobs created by the low carbon energy economy
Far more information is available about the quantities of jobs that are created by a low carbon
energy economy than about the quality of those jobs. Moreover, most of the studies have been
focusing on the renewable energy sector, and more specifically on the manufacturing side of the
renewable sector, i.e. the jobs in the industries that manufacture renewable energies equipment
(see for instance Matera, 2008 and studies by the union IG Metall in Germany).
As regards electricity production and energy services, it is useful to distinguish two types of job
changes potentially arising from measures to cut emissions.
On the one hand, a great proportion of the jobs changes will imply a change of aspects of existing
jobs, whether by altering the skills required to undertake a particular job or by changing work
practices. For instance, ASU expects that workers in coal fired power stations will implement new
technologies that maximize energy efficiency of electricity production or workers in utilities will assist
consumers to access the correct package of energy efficiency services (ASU, 2009). In those cases,
the quality is not the main issue. What matters is that members should receive appropriate training,
assessment and skills recognition that provide them with certainty of their competence to perform
new or revised work functions. Both workers and their representatives in the company should be
involved in revising and redesigning the career paths. This is what is known as “Just Transition”.
On the other hand, it is expected that measures to cut emissions in the energy sector will create
entirely new jobs to implement new energy technologies or new services that do not exist today. It is
possible to identify at least two areas where new jobs will be created:

23
- energy efficiency services, which involve energy audits and providing advice on renewable
energy and energy efficiency for commercial and household users,
- smart grids, which will require new IT competences.
Energy efficiency services are developing fast and evidence suggests that the quality of those jobs is
an issue. The way utilities have developed such services is often through outsourcing. Outsourced
energy services are often carried out under more precarious conditions, workers being covered by
poorer collective agreements or no collective agreement at all. The growing number of semi‐
independent “energy efficiency auditors” are too often unsustainable jobs. In the UK, where
government is training domestic energy assessors, trade unions Unison and GMB call this sector a
“labour market ghetto”, pointing to unsecure income and non decent wages.14 EDF in France has set
up a subsidiary for energy services where workers do not enjoy the same status as EDF’s employees.
To make the term “green jobs” meaningful, considerations such as wages, working conditions and
workers’ rights will have to become an integral aspect of future policies and strategies. Only then can
we truly speak of fair and sustainable development. Governments, communities, businesses, and
labour unions all have a role to play in ensuring a satisfactory outcome.

E. New jobs for members of PSI affiliates

As the previous chapters indicate, the impact of measures to address climate change in the power
sector will create new job opportunities in areas where members of PSI’s affiliates work. Aspects of
workers’ existing jobs will also change. An ASU report provides a detailed description of how jobs in
public services will be affected by climate change and measures to address it. Here, the focus will be
on jobs related to electricity only.
Local authorities
Planning roles will need to take into account energy efficiency options. Life cycle analysis of energy
use and emissions will have to be undertaken when conducting reviews of plants and infrastructure.
Workers in local authorities will have to provide information and education services to the public and
communities struggling to comprehend the practical implications of climate change and the local and
personal solutions they can consider.
Local governments will run and maintain energy generation plants that use the methane collected
from land‐fills and waste treatment plants.
For the larger local authorities that collect and recover green waste, they will run and maintain
bioenergy plants that burn wood waste and waste from other biomass to produce electricity. It has a
special appeal because it creates direct and indirect jobs in rural areas.
Electricity generation, Transmission and distribution
Installing and maintaining localised renewable energy equipment, especially in developing countries’
remote areas where other infrastructure is not able to make a significant efficient contribution.
Constructing, maintaining and operating district heating and cooling plants within local governments
will create new jobs. Finland has aggressively pursued DH and CHP integration, mostly through
limited municipality companies. These companies maintain DH networks, produce heat and

14
Green Alliance (2009)

24
electricity and market it to their customers.
New wind plants or wind farms can be large, utility‐scale projects. They require people with
meteorological and engineering experience to plan and build projects. Mechanical and electrical
technicians, called “windsmiths,” are required to operate and maintain the wind turbines.15
Concentrating solar power already functions on a large, utility scale. As utility‐scale CSP technologies
become commercially viable, electricians, engineers, technicians, and technical managers will be
required to design, install, and maintain equipment.
In some countries, like Australia, local government already have experience of small scale solar
electricity generation to operate remote equipment including pumps and road signals.
Geothermal for electricity production creates jobs for engineers (electrical and mechanical) and
construction workers to design and construct power plants.
Upgrading existing fossil fuel power stations with advanced ‘clean coal’ technologies will change
existing jobs.
Developers of new fossil‐fuel power stations should consider what might be required for retrofit with
CCS
Constructing new hydropower plants (in developing countries) and maintaining existing ones
(developed countries) will maintain the workforce in existing plants.
Jobs will be required to construct and maintain nuclear power plants while improving the security of
operation.
New skills are required to consider climate variability and long term climate change in sitting wind
power facilities and other production facilities.
Demand side
Energy companies need to undertake a major shift in thinking, substituting the sale of energy
services to the sale of energy per se. In the new model, consumers will buy heating, lighting and
other power in the most energy efficient way, instead of just buying electricity. This will require a
radical change of the utilities’ strategy, product, marketing and pricing policies.
New jobs will be created in energy services, audits and consulting, assistance in designing green
building, provision of loan and rebates on improvements of electric appliances and installation of
solar photovoltaic electric systems or solar water heater and developing, installing and maintaining
related equipment such as demand management meters. The Energy services market is already
growing rapidly in both Europe and North America. Lindgren, K. and L. J. Nilsson (2009).
As countries implement carbon constraints, low income households face substantial price increase in
electricity and gas. Trade union members working in community service organizations,
environmental agencies, energy corporations and companies and within local governments will be at
the forefront of assisting low income households to address these challenges (ASU, 2009).
If electric cars become reality, both utilities and local governments will have to develop plug‐in
charging infrastructure and services for charging batteries.

15
Energy Efficiency and Renewable Energy Clearinghouse (EREC), 2001, Careers in Renewable Energy

25
Transmission / distribution
Additional electricity transmission and distribution networks will have to be built and maintained to
link existing electricity generation with renewable energy sources.
Jobs will be created in the design and management of increasingly complex ‘smart’ grids, requiring
climate, electronic and computer skills to carry out forecasting, including weather forecast,
automatic control and management tasks.
Research and development
Engineers and scientists will be required to work on research and development of low‐carbon power
generating technologies, demand side management and smart grids within electric utilities. Electric
utilities are already involved in CCS pilot projects.

Key points
- If designed carefully, strategies to shift the power sector to a low carbon path will result in
positive impact on employment over the period of investment. The reason is that labour
intensity of renewables and energy efficiency is higher than fossil fuels, which is very capital
intensive.
- The massive investment in renewable energy, decentralized generation, smart grids and energy
efficiency will create new job opportunities for electric utilities and local authorities if adequate
training is provided to enable workers in those sectors to meet the skills requirements.
- However, it is clear the bulk of the new jobs associated with renewable energies and energy
efficiency will be in the construction sector and industry, to manufacture the equipment and
build the facilities.
- The key issue raised by the de‐carbonisation of the power sector is the contraction of jobs in the
coal power plants and coal mining industry arising from the phasing‐out of the less efficient coal
plants over the next decades. This decline cannot be easily offset by the growing employment in
renewables given the distinct occupation profiles as most employment in coal and gas‐fired
power plants is in fuel processing and operations and maintenance, whereas most renewables
employment is in manufacturing and construction.
- It is also important to keep in mind that even without policies to curb emissions, the coal sector
will undergo a steady decline in employment. This reinforces the need for transition measures to
assist those affected and to actively promote investment in the sectors providing labour
intensive, low carbon and efficient energy solutions.
- Carbon capture and sequestration, provided it is deployed as early as 2020, could partly offset
job losses in the coal sector by keeping some coal power plants open. However, CCS will not
reverse the declining trend in coal employment as most of the jobs associated with CCS will be
created in building and construction, and other energy sectors.
- There are concerns that a number of the new jobs arising from carbon mitigation measures,
notably in energy efficiency services, are low quality jobs, with workers covered by poor or no
collective agreement at all. Poor quality jobs in sectors that are essential for climate change
mitigation risk undermining the efficiency of the climate change policies.

26
IV. Policies

A common conclusion of the scenarios examined is that the transition to a low carbon, sustainable
energy future will not be achieved without new policies and strong government intervention.
Furthermore, PSI’s views is that collective, public provision of quality services are the most effective
and efficient means of providing answers to climate change than market and competition.
Against this background, we examine the policy areas where strong government action is required,
and provide recommendations for action by governments that have international relevance. Before
doing this, we attempt to provide some answers to the key question of how the electricity market
liberalisation interferes with the implementation of a low carbon strategy.
The analysis provided here draws upon research and expert work assessing climate change policies
that are implemented in many countries, including the Stern Review (Stern, 2007).

A. Electricity market liberalisation makes carbon mitigation more expensive to achieve

The notion that regulation is largely unnecessary and that the free market will solve most of the
problems of climate change must be considered thoroughly discredited in the aftermath of Enron,
WorldCom, and the global financial collapse of 2008. Moreover, there is growing evidence that an
unregulated electricity market is neither the most efficient nor the most just way to provide essential
energy needs.
Still, measures to curb greenhouse gas emissions take place in a liberalised electricity market. This
requires at least a thorough examination of the impact of liberalisation policies on the reduction of
greenhouse gas emissions in the power sector. Unfortunately, such assessment is lacking.
The available literature, including the climate change review by Sir Nicholas Stern and some PSIRU
research, provides evidence that liberalisation is hindering, not facilitating, the efficient and rapid
reduction of greenhouse gas emissions in this sector.
Many of the proponents of market liberalisation advocate a positive impact of market liberalisation
on climate change goals. They argue that increased competition, the segmentation of activities
(generation, transmission, distribution, sales) and the freedom of consumers to change their supplier
encourage new producers to enter the market such as renewable production and decentralized
generation. They also claim that price differentiation allows power companies to diversify their
product by selling electricity from renewable energy sources or energy services aimed at promoting
energy efficiency for the end‐user.
However, the reality shows a different picture. Considerable regulatory instruments have been
necessary to allow for grid access for electricity produced by decentralized generation or renewable,
including feed‐in tariffs, obligation to purchase, harmonisation of technical standards and connection
procedures. Even in countries such as Germany that have achieved a significant integration of
decentralized production in the grid, network operators tend to limit as far as possible the number of
distributed generation connections on their networks.
Electricity is a homogeneous product, i.e. consumers are not ready to pay extra for carbon‐free
electricity that does not deliver more service than carbon‐intensive electricity. Therefore power

27
companies have no incentive to develop new power generation technologies that take several
decades before they become commercially viable. Nor do they have interest in providing demand
side management that erodes their incomes. As a result, governments are developing costly market
schemes to make it profitable for the power companies to supply demand‐side energy efficiency
services.
Furthermore, in a context of greater price volatility on the electricity markets, investors discriminate
against peaking units (risky cash flow), and capital intensive base load technologies (e.g. nuclear,
renewables). Indeed, following market liberalisation, electricity companies have massively invested
in gas generation which maximises short‐term profit and uses well‐developed technologies, to the
detriment of renewable and decentralised generation which are characterized by unfavourable price
structures. This has blocked the structural changes in the power system needed for the long term.
Similarly, investments in infrastructure have been deferred. This is worrying considering the huge
needs of investment to tackle climate change.
Massive cuts in employment and training expenditures that have occurred in power companies over
the last two decades following market liberalization undermine companies’ ability to rapidly develop
the new technologies and services when the carbon constraint will tighten.
Another problem arises as carbon constraints are likely to drive electricity prices up, at least for the
short term. Lack of regulated tariffs leaves the power companies with the responsibility to mitigate
the impact of high energy prices on the most vulnerable in society.
To sum up, whereas energy efficiency concerns would require more coordination between
production, transmission and distribution activities, vertical disintegration introduces asymmetry of
information and conflicts of interest between the generator, the network operator and the consumer
that can only be overcome with expensive coordination mechanisms.

Key point
Evidence show that the electricity market liberalization makes carbon mitigation a more expensive
task to achieve. PSI asks governments to assess how the restructured energy markets have actually
performed with respect to cutting carbon emissions and that realistic policies be enacted which are
not dependant on dubious or highly inefficient market theories.

B. Increasing and redirecting public support for energy R&D and deployment of low‐carbon
and conservation energy technologies
The Stern‐report states that, while innovation in the power generation sector is key to decarbonising
the global economy, the power sector is characterised by low levels of research and development
expenditure by firms. Public R&D represents a significant proportion, around two thirds of the total
R&D investment. OECD figures for 2002 found an R&D intensity of 0.33% compared to 2.65% for the
overall manufacturing sector (OECD, 2006, p.35).
More worrying, the overall budget dedicated to supporting R&D in energy technologies has declined
significantly since the 1980s despite the increased prominence of energy security and climate

28
change. The IEA points to the need to restore at least to the level of 1980s.16This would involve
doubling the budget for public energy R&D from the current level of around $10 each year.
Moreover, the research efforts going into non‐fossil fuels technologies must be much larger. Today,
the total support for these low‐carbon energy sources is $33 billion each year whereas the existing
subsidies for fossil fuels worldwide are estimated at $150 billion to 250 billion each year. Today,
electricity from nuclear fission and fusion still accounts for 40% of the public energy R&D budget.
Between 1980 and 2004, renewable and conservation R&D has declined by 36% (IEA R&D database).
Interestingly, N. Stern argues that, although a carbon price can help in moving closer the point where
the new technology is competitive with the existing ones, it does not help bringing the technology to
this point. Public R&D and deployment support has been effective in encouraging the development
of generation technologies in the past, notably nuclear, wind and PV.

Key point
Public energy research and development should be doubled and redirected towards energy
conservation, environmental friendly renewable and electricity grid improvements.

C. Public investment and public service solutions for renewables and energy efficiency
The high transaction costs arising from the integration of renewable energy and decentralized
generation in the liberalised electricity market support the view that government should intervene in
the development of a green electricity sector that is publicly regulated and predominantly publicly
owned.
Firstly, huge public investments are needed to promote the development of renewable energy
sources of electrical power as well as smart grids and infrastructure for new electricity usage. A wide
range of those investments can be implemented in a few years time if granted political priority, as
the recovery plans adopted in most of the OECD and emerging economies have shown. Public sector
procurement through public electrical utilities and local authorities has a huge role to play in
generating the economies of scale needed for rapid expansion of capacities in renewable energy.
Public solutions for renewable generation would be more efficient than market based schemes such
as feed‐in‐tariffs, to support the development of renewable and decentralised generation.
Secondly, public service solutions for energy efficiency need to be designed, as an alternative to the
market‐based solutions such as “white energy certificates trading”17 and “independent energy
efficiency auditors” that have been widely implemented in developed countries. Those market based
solutions are criticized by British public services unions18 who point that they lead to potential
conflicts of interest between energy advice providers and energy services. They also point out that
the lack of coordination makes it practically impossible that energy efficiency auditors can deliver
systematic ‘street by street’ energy efficiency and community renewable advice on the scale
required to reach the UK government’s targets.

16
Page 19 OECD (2006)
17
Under such a scheme, suppliers of electricity are required to undertake energy efficiency measures
for the final user, or to purchase energy efficiency certificates.
18
Sonnet K, Shears D., UNISON and GMB, in Green Alliance (2009)

29
Public service solutions for energy efficiency combine a greater local control over supplier obligation
income, a more structured domestic energy auditor system and government‐led programs for energy
retrofitting of social‐housing homes which would help tackle the problem of fuel poverty while
creating a great number of jobs, in particular in the construction sector.
Thirdly, government must introduce strict efficiency standards and labeling for appliances such as air
conditioners, refrigerators and light bulbs.

Key points
The most efficient and cost‐effective way to meet the renewable and energy efficiency targets is
government intervention in the development of publicly regulated and publicly owned renewable
and energy efficiency sectors. Market‐based solutions for energy efficiency in particular white
certificates trading and independent energy efficiency auditors, are ill‐suited to the pace and
magnitude of energy efficiency improvements required to address climate change.
Massive public investment are needed in renewable generation, smart electric grids and
infrastructure allowing for the development of sustainable electricity usages such as charging
infrastructure for electric cars. Public procurement through public electric utilities has also a huge
role to play.
Public service solutions for energy efficiency combine a greater local control over supplier obligation
income, a more structured domestic energy auditor system and government‐led programs for energy
retrofitting of social‐housing homes.

D. Pricing carbon emissions

Carbon pricing is often confused with carbon markets or carbon tax. However, the Stern review,
which advocates carbon pricing, makes it clear that there are several ways of putting a price on
carbon: carbon pricing can be explicit, through tax or cap‐and‐trade schemes, or implicit, through
regulation including, among other instruments, quotas on emissions (without trading).
The rationale for carbon pricing is that putting an appropriate price on carbon will lead individuals
and businesses to switch away from high‐carbon goods and services, and to invest in low‐carbon
alternatives.
This being said, as both cap‐and‐trade systems19 and carbon tax are either implemented20 or
considered by developed countries and a central issue in the negotiations of the new international
climate change agreement, it is useful to examine their efficiency in meeting the de‐carbonisation
target. Moreover, power plants are “natural” targets of those schemes for competitiveness reason
(they are in general not exposed to international competition) and because of the relatively small
number of facilities.

19
Under a cap‐and‐trade system, companies are granted quota of CO2 emissions (“cap”); they can
exchange quota on the CO2 market, so that a company facing high cost to reduce its emissions can
buy quota to a company facing lower costs. The trading market sets a price for a ton of carbon
emissions based on the supply and demand of such allocations. The supposed advantages of carbon
cap and trade here is that it enables emissions reductions to take place wherever they are cheapest.
20
The EU has created the first region‐wide cap‐and‐trade scheme in 2005 (the EU ETS).

30
Experience with cap and trade systems indicates that:
The CO2 prices have been too low and too erratic to drive structural, lasting changes in the energy
system (figure 5). Investments in highly emitting coal‐fired power plants have been possible under
the scheme. The risk of excessive financialisation of the international greenhouse gas market has also
been highlighted by reports.21
Importantly, research showed that when quota have been allocated for free, power companies have
made windfall profits as they have passed‐on the opportunity cost of the allowances to the
consumer despite not having paid this itself. Windfall profits have been estimated to between €24‐35
billion in 2005‐6 in the EU. 22 Although a normal behavior in a free energy market where electricity
price is based on the marginal production cost 23, it raises concern because there is no guarantee that
the companies invest those profits in lowering their carbon footprint and domestic consumers in
countries with main share of nuclear and hydro generation cannot benefit from the fact that
electricity is already non‐carboned.24
In a deregulated electricity market, the increase in the retail price of electricity that results from CO2
pricing could have an important effect on the lower income households.
Power companies make an intensive use of the flexible mechanisms (Clean development mechanism,
CDM) that allow them to offset their emissions with credits from projects in developing countries.25
This raises several issues, among which the fact that companies make profit from buying cheap
carbon credits in developing countries instead of modernising their plants at home.
Given the high stake for employment, investment and sustainable development, it is essential that
PSI takes a stance on the issue of cap and trade systems. Three issues deserve special attention:
- Should PSI support an international tax as an alternative to the cap‐and‐trade approach
embodied in the Kyoto Protocol? Most economists believe a carbon tax would be a superior
policy alternative to an international emissions‐trading regime. They argue that it is more cost‐
effective, it provides a more predictable long‐term price for energy producers, and that
emissions trading schemes would be subject to manipulation by special interests.
- If a cap and trade regime is adopted in the future climate agreement, how to ensure that wind‐
fall profits in the power sector gos towards low carbon, sustainable investment? Should
auctioning of carbon permits be recommended for those sectors that are able to pass on the
cost of free permits to the consumer (power sector mainly)? How should revenues of auctioning
be earmarked for instance to the fight against climate change, the mitigation of social impact, in

21
Caisse des dépôts (n°12, November 2007)
22
Sijm and all, 2006
23
The reason is that price‐fixing in the electricity markets are based on the marginal cost of
production, i.e. the cost of the last produced kWh. The cost of an emission allowance will therefore
apply to the marginal unit of electricity, raising the market price for all kWh produced. So fossil
power producers will receive the higher price for each kWh they produce, but costs for emitting CO2
will only apply to the very small share of kWh that do not benefit from free allocation.
24
Dominique Finon, 2008
25
Japan's electric power companies have bought 250 million tonnes of carbon credits from abroad to
meet its voluntary goal to help achieve the nation's commitments under the Kyoto Protocol.

31
 particular through investment in energy refurbishment of social housing and public
transportation, and the support to workers affected by the shift to a low carbon economy?
- How to regulate Clean Development Mechanisms, so that their use a) is additional to the
domestic effort in developed countries, b) contribute to social and environmental sustainable
development in the host country by giving priority to labour intensive, low carbon activities
providing decent jobs and c) ensure civil society and trade unions participation.

Figure 5 ‐ CO2 prices on the European carbon market

€ /t de CO2
34 €
32 €
30 €
28 €
26 €
24 €
22 € EUA Dec. 09
20 € 14.93
18 €
16 €
14 € EUA Phase I
12 €
10 €
8€
6€
Jul-05 Sep-05 Dec -05 Mar-06 Jun-06 Aug - 06 Nov-06 Feb-07 May-07 Aug -07 Oct-07 Jan-08 Apr -08 Jul-08 Oct-08 Dec - 08 Mar-09 Jun-09

EUA December 2009 price EUA Phase I price

Source: ECX, BlueNext, Reuters.

Key points
Cap‐and‐trade is not the only means of “making the polluter pay”. Carbon tax is preferred by
economists as the revenues can be used for funding public investment in low carbon, efficient
technologies and infrastructure.
Under a cap and trade system, free allocation of CO2 permits to power companies opens up
opportunities for wind‐fall profits. This can be mitigated by auctioning the permits. Also, strict
conditions must be established for the use of “carbon credits” so as to incentivize the modernization
of the power plants in the developed countries and promote sustainable, labour intensive carbon
emissions projects in developing countries.
With both a carbon tax and cap and trade systems, the negative social impact on the most vulnerable
households must be mitigated.

E. International cooperation
As we have seen, energy efficiency and renewables can bring important economic and social benefits
to communities in developing countries while helping to curb emissions in the long term. Yet, the
additional cost of developing renewables or retrofitting old coal‐fired power stations is prohibitive
for these countries. The cost of curbing greenhouse gas emissions in the power sector in developing
countries is estimated to $43.3 billion in 2030 (UNFCCC, 2007).

32
There is a need to scale‐up direct international cooperation, in line with the key principle enshrined
in the UNFCCC that developed countries should provide assistance to developing countries to
facilitate mitigation and adaptation policies.
Also, public aid should be redirected towards energy technologies which deliver on both climate
change and poverty reduction objectives. This requires a significant shift in the budget priorities of
international development institutions, export credit agencies, and bilateral development assistance
programs as they are both biased towards fossil fuels and not addressing the needs of the poor
people. In 2006, the World Bank substantially increased the size of its Energy Sector Programme, Oil
and gas received a massive 93% increase in funding, while investment into renewable energy, such as
wind, solar, micro‐hydro, increased by only 1.4%. In the power sector, the priorities of international
cooperation and private investors have been the extension of centralised electricity grids. Although
extension of grid‐based systems is necessary especially to reduce urban energy poverty, a growing
body of evidence shows that this ‘centralised’ model tends not to reach poor men and women.
Therefore, extension of electricity grids must be complemented by targeted pro‐poor energy policies
that support investment in tried and tested renewable technologies that can be used in remote rural
communities to lift people out of poverty (Case study 3).
Technology transfer is essential if developing countries are to adopt a low carbon development
pathway in the time and scale needed. Key conditions for successful technology transfer are ensuring
developing countries are part of the innovation process, transferring truly cleaner technologies and
better practice multinational companies 26 and matching with capacity building activities.
International R&D programs on low carbon technologies, such as CCS or hydrogen, must involve
developing countries. The international community should assist developing countries to access
patents that are necessary for the development of climate‐friendly technologies.
In general, developing new technologies will require direct government subsidy, pro‐poor energy
policies and pro‐active industrial and energy policies. It is essential that multilateral trade
agreements, in particular GATS, and IFIs programs do not impose limitations on policies supporting
climate ‐friendly technological development and policies that address the need of energy‐poor
households27. Power sector liberalisation and privatisation in developing countries promoted by IFIs
should be stopped has they have failed to provide universal access to energy and are ill suited to
drive the decarbonisation in the power sector.
There is a potential for transfer of public sector and public utilities knowledge on energy efficiency
and development of renewable. PSI aims to spread the concept of public public partnership, i.e.
policies, programs, practices targeting public sector energy efficiency and renewable, especially in
developing countries.

Key points
There is a need to scale‐up direct international cooperation and to redirect it towards tried and
tested renewable and energy efficient energy technologies which deliver on both climate change and
poverty reduction objectives, especially for remote rural communities.

26
Empirical studies find little evidence that MNCs transfer either significant cleaner technology or
better practices (IPCC, 2007)
27
S.Thomas et al.

33
Technology transfer must be accelerated, notably by ensuring that multinational companies transfer
truly cleaner technologies and best practices. Trade rules and IFIs programs should not prevent
governments from adopting energy and industrial policies supporting climate friendly technological
development and pro‐energy poor policies.

study 3: Tuungu Kabiri Community Micro‐Hydro Project, Kenya

This micro‐hydro electricity project developed with the NGO Practical Action on the slopes of Mount
Kenya generates 14 kW of power. The electricity is used by 200 households (about 1,000 people) in
the local community and is entirely maintained by the community. The scheme provides electricity
24 hours a day and has enabled people to start small businesses such as hairdressing, woodworking,
metal welding, battery charging and even a small hotel. Many more people benefit as they come
from outside the community to use the facilities – and watch football on the television!
This scheme demonstrates both the benefits that access to modern energy can bring to poor
communities, and the economic empowerment that comes from a small decentralised scheme,
controlled and maintained by local people.

Source: http://practicalaction.org/home

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