The IEA’s World Energy Employment 2023 report is an opportunity to reflect on how energy experts have risen to the challenge of a clean transition

COVID-19 and Russia’s invasion of Ukraine continue to put pressure on the energy sector. Faced with a coal resurgence, skills shortages and weakened investments, trends in the energy sector’s workforce are valuable to understand how challenges in a clean energy transition will be overcome

Published

November 29, 2023

Oscar Pusey

Research Analyst

Business & Policy

Predictions for 2023 suggested hurdles for the energy transition

As the world welcomed in 2023, the preceding years of global pandemic and energy crisis still loomed large over international efforts to transition global energy systems towards a clean and sustainable future. The Economist’s Energy Outlook 2023 report, at the beginning of the year, warned of three factors that could present a challenge, these were:

· Marginal growth in coal consumption to compensate for gaps in gas supplies.

· More extreme weather events forcing many countries to fall back on fossil fuels.

· A weakening in renewable energy investment.[i]

Now, as our planet once again nears the end of its annual trip around the sun, the IEA’s World Energy Employment report gives us an opportunity to examine the reality of 2023 for the global energy market. Did the Economist’s predicted perils present the pressure they were expected to? If so, how did the world’s energy experts rise up to meet the challenge?

Global trends in energy employment from the IEA’s WEE 2023 report

The IEA’s WEE 2023 report highlights the following as key trends for the energy sector in 2023.

· The rise of clean energy, which currently employs more people than fossil fuels, is the overriding reason that there are more people working in the energy sector now than there were in 2019.

· Everywhere in the world, there has been an increase in the number of clean energy jobs; in China, however, there has been an unparalleled shift in the workforce's focus towards clean energy.

· Although there are a lot of encouraging trends for jobs in the renewable energy sector, there is still a skilled labour shortage that has to be addressed. According to an exclusive IEA survey of more than 160 energy companies, recruiting managers had the most trouble filling jobs in the ‘installation and maintenance work’ sector.

· The number of workers seeking degrees or certifications relevant for positions in the energy sector is not keeping up with the increase in demand.

· Although there are fewer short-term transitional hazards for oil and gas workers, the industry’s labour patterns are already being influenced by the long-term drop in the demand for fossil fuels.

· Although pay differences between energy segments may hinder the transfer of necessary skills, higher compensation in the energy sector has assisted in luring individuals from other industries.

· Up until 2030, job growth is expected to outpace decreases in all scenarios. However, policymakers should consider mitigating skills shortages and optimising the advantages of newly generated jobs.[ii]

The overall picture is that clean energy job creation is now, and in the lead up to 2030, likely to mean overall growth in energy employment, but a skills gap is developing that will require action from businesses and policy makers. Such a skills gap is quantified and analysed across 7 regions, 14 key economies and 14 key industries in ZCA’s new report ‘The emerging green skills gap & Gen Z attitudes’.

What energy employment insights does WEE 2023 offer in the face of predicted key challenges?

Managing a potential coal resurgence

A decline in coal employment is uncoupled from productivity. Due to the mechanisation of coal production as economies develop, reductions in employment do not necessarily represent a reduction in coal itself. For example, WEE 2023 highlights that in China, between 2002 and 2022, each coal mining job created was accompanied by a loss of 1.5 jobs related to productivity improvements. This explains the finding within WEE 2023 that despite a reduction in coal jobs, production rose by 7%.[iii]

This rise is worrying as the UN suggested production must fall 6% per year in their 2020 production gap report.[iv] Of course this call from the UN came before the pressure applied by Russia’s invasion of Ukraine impacted the global energy market, so what is being done now to prevent further backslide into coal use as a response to gas shortages?

One successful example of long-term coal reduction comes from the UK. Fossil fuels accounted for about a third of the UK's electrical production in 2010; coal alone made up one third of power for the country. But in less than a decade, the UK's power structure has changed, with coal currently producing little more than 2%. Importantly, this reduction was not associated with increases in other fossil fuels- gas generation decreased from 46% of the electrical mix in 2010 to 39% in 2022. Nor did nuclear power increase, essentially staying the same since 2010. Rather, a sharp decline in energy demand (-16%) and a substantial growth in wind and solar power output (3-25% and 0-4% of total electricity) have been the main drivers of the UK's decline in coal power.[v] Importantly, there was no resurgence of coal in the UK after the invasion of Ukraine. Ember suggests that the highlighting coal’s health impacts and setting short term targets are lessons from the UK’s success that could aid other nations in their endeavour to end reliance[LF1] .[vi]

Coping with extreme weather’s impact on renewables

Extreme weather events affect energy infrastructure in ways that go beyond dependability. Renewable energy sources like solar and wind power can be impacted by temperature rise and altered precipitation patterns. For instance, larger cyclones can harm wind turbines, while heatwaves can reduce the efficiency of solar panels. These difficulties emphasise how crucial it is to create resilient energy systems that can tolerate shifting weather patterns and adjust accordingly.[vii]

WEE 2023 highlights that digital skills could provide a solution but also that shortages in this area present a problem. Specific digital competencies hold significant value for the power industry. In addition to being utilised more frequently in more conventional domains like automated operations, power plant operation and network design, they are also making it possible to create novel instruments for remote maintenance.[viii] For example, operators of renewable energy sources can anticipate maintenance requirements and avert equipment failures by utilising sophisticated algorithms and machine learning approaches. Predictive maintenance systems save downtime and optimise maintenance schedules by identifying possible problems before they arise by evaluating past data and patterns.[ix] The report also highlights that four out of ten adults in Europe are thought to be digitally illiterate according to the European Commission.[x] According to IEA study, most large economies offer specialised digital skill certificates relating to the power sector; however, emerging and developing economies are less likely to offer such.

A keen eye on continuing clean energy investment

Over the previous two years, investments in clean energy have increased by 40%, which has led to a high demand from top energy companies to hire more people in the clean sectors. Still, the prognosis for the sector and its workforce remains clouded by the shaky global economic recovery and new geopolitical worries. There are still tight labour markets and high interest rates in some areas, which makes the energy sector cautious when it comes to hiring.[xi] The Economist’s energy outlook report raised concern on the weakening of investment due to a ‘commodity price boom’ in fossil fuels which could divert investment away from renewables.[xii] The IEA’s report does suggest that new fossil fuel licensing as a response to the global energy crisis will lead to a rebound in fossil fuel jobs. This rebound could hinder the skills transfer from fossil fuels to clean energy and thus introduce greater risk into longer term renewable investments.