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Will cutting emissions create 250,000 jobs in a decade?

2021-02-25 17:00:45

AAP FactCheck Investigation: Does modelling show that adopting a target of net zero emissions by 2050 will create 250,000 jobs in Australia over the next decade?

The Statement

“There was a report released by Deloitte just last week which shows that if we act then there’s 250,000 jobs that can be created in the Australian economy over the next decade by adopting that approach of net zero emissions by 2050.”

Matt Thistlethwaite, Labor MP, February 9, 2021.

The Analysis

Labor MP Matt Thistlethwaite has claimed a recent report found adopting a target of net zero emissions by 2050 will create 250,000 jobs in Australia over the next decade.

During an interview on Sky News on February 9, the representative for Kingsford-Smith in Sydney’s eastern suburbs said the benefits of reaching net zero emissions outweighed the costs of inaction.

“There was a report released by Deloitte just last week which shows that if we act then there’s 250,000 jobs that can be created in the Australian economy over the next decade by adopting that approach of net zero emissions by 2050,” he said (video mark 2min 30sec).

“The cost of not acting, and basically doing nothing, as the government is, is about 800,000 jobs are lost. So there is a net benefit I think for Australia in taking that approach and acting.”

AAP FactCheck examined Mr Thistlethwaite’s statement that modelling showed adopting a net zero target will create 250,000 jobs in Australia over the next decade.

His office said the statement was based on a Deloitte Access Economics report from November 2020. The report included modelling on the economic effects of “unchecked” climate change and an alternate scenario of the globe reaching net zero emissions by 2050.

It said that a “new growth recovery” post-COVID-19 – including limiting global warming to 1.5C and moving to net zero emissions worldwide – would add over 250,000 jobs by 2070 (page 6) compared to a scenario in which climate change was unchecked.

The job gains would not come within a decade, as Mr Thistlethwaite claimed, nor was the prediction based on the effects of Australia adopting the net zero target. Rather, it relied on global action to reach that goal.

The report also predicted there would be net job losses under the same “new growth recovery” scenario until at least the year 2050, when there would still be 22,000 fewer jobs (table A.5 and chart A.4, pages 69-70).

The jobs that were added would partially be created by investment in renewable energy and other efforts to mitigate climate change (page 46). It said the modelling was also based on there being a global increase in productivity in line with the International Energy Agency’s (IEA) Sustainable Recovery Plan (page 66).

The IEA plan, produced in collaboration with the International Monetary Fund, sets out policies to boost economic growth by reducing greenhouse gas emissions as part of government stimulus to recover from the COVID-19-induced recession (page 13). It said this would cost about US$3 trillion and create nine million jobs a year over three years (page 14).

The Deloitte report predicted that if there was no global action on climate change and the earth warmed 3C by 2070 then 880,000 jobs would be lost in Australia (page 5) compared to a scenario in which there were no climate change effects.

The figure was based on modelling the “physical damages” from climate change and their impact on productivity (page 59). These damages included climate change’s impact on capital, land, agriculture, tourism, health, energy demand and labour productivity.

Deloitte Access Economics associate director Claire Atkinson said Mr Thistlethwaite’s interpretation would have been “broadly correct” if he had accurately quoted a 2070 date for the 250,000 jobs gained.

However, University of Melbourne Richie chair of economics John Freebairn, one of Australia’s top economists, said the assumptions used in the modelling, including that the world would achieve net zero emissions by 2050, were “unlikely”.

Prof Freebairn said reducing emissions and adapting to climate change would create and destroy jobs in various industries, and models based on alternate assumptions would reach different conclusions as there were many unknown parameters, such as the prevailing conditions in the global economy.

He said efforts to reduce emissions were generally more costly than a business-as-usual scenario, “otherwise the less polluting options would have been adopted”. But this had to be weighed against the cost of climate change.

“In aggregate, mitigation decisions that are more costly and less productive for the private sector decision-makers would reduce employment. These costs of mitigation have to be compared with the benefits of less climate change.”

Prof Freebairn noted that Australia accounted for just over one per cent of global greenhouse gas emissions, which meant the country achieving net zero emissions by 2050 in isolation would have a negligible impact on the effects of climate change and lead to a net loss of employment.

But he agreed worldwide action to reduce emissions and alleviate the impact of climate change would reduce the cost of climate change adaptation and boost employment and productivity.

University of Canberra economics professor and director of the Centre for Labour Market Research Phil Lewis also said different assumptions on the impacts of climate change could produce contrasting results for its effect on the jobs market.

“For instance, a major driver of the (Deloitte) model is the extent to which rising temperature reduces productivity such as through land degradation and employees getting too hot and reducing their effort,” he said.

“There is no allowance for changes in technology, such as those that have taken place throughout history, in improving productivity of the land base or through air conditioning and improving building standards.”

University of Queensland economics professor John Quiggin, who specialises in environmental economics, said climate change would harm the economy and reduce employment, but in the long run the main impact would likely be lower wages rather than job losses.

However, he said shifting to renewable energy would employ more people as renewables were more employment-intensive over a full life cycle than fossil fuel generation.

Prof Quiggin referred to a report published in November 2020 by Climate Action Tracker, a research consortium partly funded by the German Ministry for the Environment, which said accelerating the transition to renewable energy would create 46,000 jobs in Australia between 2021 and 2030 (page 3).

The figure took into account job losses in industries linked to fossil fuel power generation (Figure 14, page 26). With policies to incentivise local manufacturing of components like solar panels and batteries, the number of jobs created could increase to 75,000.

Other analysis into the impact on employment of reaching net zero emissions has led to a range of conclusions.

A January report from conservative think-tank the Institute of Public Affairs said Australia targeting net zero emissions by 2050 would put 653,000 jobs “at risk” (page 4). It said this was calculated by adding together all positions in industries where the emissions per job were above average.

It did not go into any further detail about what proportion of jobs in industries emissions-intensive industries would be lost, or over what time-frame, however it claimed the jobs created by a net zero target would not outweigh the job losses it caused (page 8).

As evidence for this, the report said between 2009-10 and 2018-19 the number of people employed in “renewable activities” increased by 14,700, while the number of people employed in manufacturing declined by 76,200 (page 9). However, the report did not specify how the job losses in manufacturing were linked to renewable energy or emissions reductions.

A report by the Beyond Zero Emissions think tank, which has a stated purpose of showing “how Australia can prosper in a zero-emissions economy”, said that if the government focused on encouraging low-carbon technology as part of a COVID-19 recovery plan it could create over 200,000 ongoing jobs within five years in sectors including renewable energy, buildings, transport and manufacturing (page 9).

A report on the modelling used in the plan said it was based on the unemployment rate not returning to seven per cent until 2023 (page i) due to the pandemic, however the latest unemployment figures show the unemployment rate had already declined to 6.4 per cent in January.

The job creation also relied on a significant increase in spending, including $35 billion to make buildings more energy efficient and $1.7 billion in government funding to upgrade the electricity transmission network (page v).

Power station at sunset
 A Deloitte report says unchecked climate change would cost Australia 880,000 jobs. 

The Verdict

AAP FactCheck found Mr Thistlethwaite’s statement that modelling showed Australia adopting a net zero target would to create 250,000 jobs over the next decade to be mostly false.

Mr Thistlethwaite misquoted a report by Deloitte, which said there could be 250,000 additional jobs in Australia by 2070. However, this figure was also based on the world becoming carbon neutral by 2050 rather than the economic impacts of Australia taking on the target, among various assumptions.

Other research has included a range of employment predictions, from 200,000 jobs created with significant investment in renewable energy to jobs losses due to the impact of shifting to a low-carbon economy.

Mostly False – The claim is mostly false with one minor element of truth.

* Editor’s note: AAP FactCheck has expanded its ability to fact-check environmental issues with the support of the Australian Conservation Foundation. AAP FactCheck retains full editorial independence in this project and continues to apply the rigorous standards required for accredited members of the International Fact-Checking Network.