Who’s ready for the green economy? Measuring skills for the low-carbon transition

What are green jobs and skills, how do they impact current occupations and how can they contribute to a greener and more modern economy? Banner image: Shutterstock/Jacky Photographer

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This article is part of a series in which OECD experts and thought leaders  from around the world and all parts of society  address the COVID-19 crisis, discussing and developing solutions now and for the future. Aiming to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge, opinions expressed do not necessarily represent the views of the OECD.

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Notwithstanding the delays implementing the Paris agreement on climate change, carbon neutrality remains a key priority in the agenda of all industrialised economies. The transition away from fossil fuels requires enormous investments to modernise most sectors of the economy, from power generation to transport, agriculture and manufacturing. Policymakers around the world agree that we need a series of co-ordinated policy interventions for the low-carbon transition. Beyond addressing market failures related to pollution, these interventions should also address others related to knowledge creation and network construction. While post-pandemic policy discourse focuses on building the future’s tangible and intangible infrastructure, ambitious green spending plans are opposed in the present by both industrial lobbyists and workers worried about their jobs. To create policies that address these concerns, a better understanding of the skills needed in a low-carbon economy is important.

Distributional effects of green spending packages are often invoked as the main political obstacle to the low-carbon transition, echoing the protests of the “Yellow Vest” movement in France or the job-killing argument for fossil fuel workers in the United States. Particularly for employment effects, distributional concerns loom large due to the spatial concentrations of fossil fuel industries, whose collapse may trigger a cascade of social problems (i.e. crime, drug use and various psychological problems) in the most affected regions. While the European Green Deal and the proposals currently discussed by the US Congress envisage compensation packages for distressed communities and workers, the best way to spend this money remains unclear. Intuitively, retraining coal miners has greater potential for long-term employability than offering them generous redundancy payment. To be effective, retraining should target the skills required in potentially fast-growing, low-carbon activities—so called “green skills”—yet current policy analyses lack a measurement framework to identify them. For example, the European Skills Agenda for sustainable competitiveness, social fairness and resilience proposes explicit targets about how to improve skills to facilitate the digital transition, while the plan for the creation of skills for the green transition remains vague, e.g. “defining a taxonomy of skills for the green transition”.

More on the Forum Network: Net-zero Economy, Net Economic Benefits: The green future of skills, jobs and infrastructure by Philip Jordan, Vice-President, BW Research Partnership; Senior Fellow, Harvard University

In a series of recent papers, we make the case for the use of the “task” approach specifically to identify green jobs and skills. The main strength of this approach is that it defines the occupational exposure to a certain technology—whether green or not—using granular data on the task content of occupations. These data were developed in the United States to inform labour market actors on emerging skill mismatches and bottlenecks. The most prominent example is the workplace survey known as the Occupational Information Network (O*NET), which contains a very comprehensive list of tasks and skills used in more than 900 occupations. Recently, Germany and Italy have conducted similar surveys to retrieve detailed information on the task and skill content of occupations. The OECD’s Programme for International Assessment of Adult Competences (PIAAC) collects information on a smaller subset of skills and for fewer occupations, but in multiple countries. In the private sector, new players, such as Burning Glass Technology, have developed new algorithms to extract the task content of job vacancies in a O*NET-type of setup.

Despite this progress in data collection, only a few datasets measure the occupational exposure to green technologies and production methods. An exception is the Green Economy Program of O*NET that was designed to collect detailed information on green and non-green tasks for around 100 occupations more closely involved in the green economy. Green tasks are defined here by the potential to reduce harmful environmental impacts; examples include “life-cycle analyses of environmental impacts” or “develop specifications for wind technology components”. Using these data, we constructed an index of occupational greenness that is used to identify, within a broad set of general skills and competences, those that are more likely needed to perform green tasks. The idea is to let the data reveal the skills that have an advantage in performing green tasks. We find that the green skills are primarily engineering and technical skills that are not only acquired through university education, but also in vocational and on-the-job training courses.

Watch the video Will our recovery be sustainable? which discusses the sustainability of pandemic related recovery efforts

Importantly, we show that our green skill index is highly correlated with the labour market outcomes of environmental policies. First, the green investments of the American Recovery and Reinvestment Act enacted after the Great Recession of 2008 created more jobs in United States regions that have an abundant supply of workers with the appropriate green skills. Second, new National Ambient Air Quality Standards in the mid-2000s increased the local demand for workers with green skills in United States metropolitan areas facing more stringent regulatory requirements. Third, the historical increase of energy prices in the European Union manufacturing sector boosted the demand of technicians and professionals, which include the most green-skill intensive occupations. Finally, a task-based estimate of the share of green employment, which reweights employment data using the occupational share of green tasks, closely matches estimates of the share of green goods and services. In contrast, occupation-based measures of green employment, which simply classify occupations as green or not, overstate the size of green employment in the economy.

Overall, these applications shed light on the importance of building precise measures of green skills to predict the macroeconomic and distributional effects of green spending policies. But such data are not widely available. The lack of task and skill data for several countries can only be fixed through the development of new data projects. Thus, now is the time to design surveys based on valid assumptions and principles. This blog post makes the case for the task-based approach as the appropriate conceptual framework to design such surveys or, as for the case of Burning Glass data, to extract information from job vacancy data. As a cautionary note, while the task-based approach is well-suited to analyse aspects of retraining to better match labour supply to the needs of a low-carbon economy, a systemic shift towards a low-carbon economy also needs profound changes in individual behaviours and values. This requires a deeper rethinking of the entire vocational training and educational systems, beginning with pre-schooling. This is an unexplored area of research where more efforts are much needed.

Lear more about the green skills in the 2021 joint Cedefop/OECD symposium: Apprenticeships for greener economies and societies

Watch this video to learn about the results of the OECD's Programme for the International Assessment of Adult Competencies (PIAAC), which measures adults’ proficiency in key information-processing skills

Related Topics

Climate  Sustainable Development Goals New Societal Contract  Future of Work  Future of Education & Skills 

Francesco Vona, David Popp & Giovanni Marin

Senior Economist, Senior Research Associate & Associate Professor, Sciences Po, Center for Policy Research, University of Urbino Carlo Bo

Francesco Vona is senior economist at the OFCE (Observatoire Français des Conjonctures Économiques) of Sciences-Po, research associate at the Euro-Mediterranean Center on Climate Change and at SKEMA Business School, visiting research fellow at the Grantham Institute of the London School of Economics and adjunct visiting professor at Ca’ Foscari University of Venice. His research is at the intersection between environmental, labour and international economics.

Francesco studied Statistics and Economics at the University of Rome La Sapienza, where he also completed his Ph.D. and obtained his first academic appointment as post-doctoral research fellow. He taught courses at Sciences-Po, SKEMA Business School, University Nice Cote d’Azur and Ca’ Foscari University of Venice, at the undergraduate, graduate and Ph.D. level. He has consulted for the Enel Foundation, the Organization for Economic Co-operation and Development, the Joint Research Center and the Social Situation Monitor of the EU commission. He also participated in several European projects and was the leader of the Sciences-Po team in the EU H2020 project Innopaths.

His recent research focuses on the evaluation of environmental and climate policies with a particular focus on the distributional and labour market impacts; measuring green jobs, skills and the green comparative advantage; assessing the effects of international trade on emissions at the firm and regional level.

David Popp is a Professor of Public Administration and International Affairs, a Senior Research Associate in the Center for Policy Research, and the Caroline Rapking Faculty Scholar in Public Administration and Policy. David is also a Research Associate of the National Bureau of Economic Research and a Research Network Member in the Energy & Climate Economics Research Group of CESifo. David's research interests are in environmental policy and the economics of technological change. Much of his research focuses on the links between environmental policy and innovation, with a particular interest in how environmental and energy policies shape the development of new technologies that may be relevant for combating climate change.  His work has been funded by the National Science Foundation and the U.S. Department of Energy, and has been published in a variety of economics and policy journals, including American Economic Review, the Journal of Environmental Economics and Management, Nature Energy, and the Journal of Policy Analysis and Management.  His 2002 publication in the American Economic Review, “Induced Innovation and Energy Prices,” was one of two articles selected for the 2017 Association of Environmental and Resource Economists Publication of Enduring Quality Award. Professor Popp has served on the U.S. General Accounting Office Expert Panel on Climate Change Economics, the U.S. Environmental Protection Agency’s Advisory Council on Clean Air Compliance Analysis, and the Advisory Committee of the Green Growth Knowledge Platform, and has consulted for the Organization for Economic Co-operation and Development and the World Bank. David received a B.A. in Political Economy from Williams College in 1992, and Ph.D. in economics from Yale University in 1997.

Giovanni Marin is associate professor of applied economics at the Department of Economics, Society and Politics of University of Urbino Carlo Bo (Italy) since 2019 and leader of the Urbino unit at SEEDS. Previously he was assistant professor at the University of Urbino Carlo Bo (2016-2019) and post-doctoral researcher at the Institute for Sustainable Economic Growth of the National Research Council of Italy (IRCrES-CNR, Italy, 2012-2016) and OFCE - Sciences Po (France, 2014-2015). He obtained a PhD in Economics, Markets, Institutions at the IMT Institute of Advanced Studies Lucca (2012) and a master degree in Applied economics and economic policies at the University of Ferrara (2008).  He took part of a number of national and EU research projects and he was involved in the European Topic Centre on Sustainable Consumption and Production and in the European Topic Centre on Waste and Materials for the Green Economy of the European Environment Agency. His research, published in international journals (e.g. European Economic Review, Journal of Environmental Economics and Management, Energy Economics, Environmental and Resource Economics) focuses on the economic analysis of drivers and consequences of environmental innovations, on the environmental and socio-economic consequences of environmental policies, on the assessment of the skills needed for sustainable transitions and on the use of environmentally extended input output analysis for integrated assessment. At the University of Urbino, he teaches Environmental and land economics, Economics of globalisation, Economics of innovation, Regional economics and Applied econometrics.