CHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

15.1 ASSUMPTIONS

............................................................................................................... 15-1 15.2 METHODOLOGY

........................................................................................................... 15-1 15.3 RESULTS

................................................................................................................... ...... 15-2 REFERENCES

..................................................................................................................... ..... 15-7

LIST OF TABLES
Table 15.3.1 Net National Change in Jobs for VOP.RC.M by TSL

......................................... 15-2 Table 15.3.2 Net National Change in Jobs for VOP.RC.L by TSL

.......................................... 15-3 Table 15.3.3 Net National Change in Jobs for VOP.SC.M by TSL

......................................... 15-3 Table 15.3.4 Net National Change in Jobs for VCT.RC.M by TSL

......................................... 15-3 Table 15.3.5 Net National Change in Jobs for VCT.RC.L by TSL

.......................................... 15-3 Table 15.3.6 Net National Change in Jobs for VCT.SC.I by TSL

........................................... 15-3 Table 15.3.7 Net National Change in Jobs for VCS.SC.I by TSL

............................................ 15-4 Table 15.3.8 Net National Change in Jobs for SVO.RC.M by TSL

......................................... 15-4 Table 15.3.9 Net National Change in Jobs for SVO.SC.M by TSL

......................................... 15-4 Table 15.3.10 Net National Change in Jobs for SOC.RC.M by TSL

....................................... 15-4 Table 15.3.11 Net National Change in Jobs for HZO.RC.M by TSL

....................................... 15-4 Table 15.3.12 Net National Change in Jobs for HZO.RC.L by TSL

........................................ 15-5 Table 15.3.13 Net National Change in Jobs for HZO.SC.M by TSL

....................................... 15-5 Table 15.3.14 Net National Change in Jobs for HZO.SC.L by TSL

........................................ 15-5 Table 15.3.15 Net National Change in Jobs for HCT.SC.I by TSL

......................................... 15-5 Table 15.3.16 Net National Change in Jobs fo r all Commercial Refrigeration Equipment by TSL

............................................................................................................... 15-6

15-i15-iiCHAPTER 15. NET NATIONAL EM PLOYMENT IMPACT ANALYSIS The U.S. Department of Energy (DOE) conduc ted the employment impact analysis to estimate indirect national job creation or elimination resulting from proposed energy conservation standards because of reallocation of the associated commercial expenditures for purchasing and distributing comme rcial refrigeration equipment (CRE). DOE estimated the national impacts on major sectors of the U.S. economy using publicly available data and incorporating different energy pr ice scenarios. The employment impact analysis does not evaluate direct employment impacts at manufacturers’ facilities, which are considered in the manufacturer impact analysis (see Chapter 12 of the TSD).

15.1 ASSUMPTIONS If promulgated, DOE expects CRE-amended en ergy conservation standards to decrease the national energy consumption, and, therefore, reduce energy e xpenditures. The savings in energy expenditures may be used on new investment or not at all (i.e., they may remain “saved”). The amended energy conservation standards may increase the purchase price (i.e., equipment price plus sales tax) and in stallation costs of commercial refrigeration equipment. Using an input-output model of the U.S. economy, this analysis estimated the year-to-year effect of these expenditure impacts on net economic output and employment. DOE intended this analysis to quan tify the indirect employment impacts of reduced expenditures for energy and reallocation of that money toward other sectors of the economy.

15.2 METHODOLOGY DOE defines the net national employment impacts resulting from proposed amended energy conservation standards for commercial refrigeration equipm ent as the net national change in jobs in the general economy. The key factors affecting the outco me of net change in jobs are (1) increased spending on the purchase and inst allation of commercial refrigeration equipment meeting the amended standards, (2) reduced customer spending on electricity, (3) reduced spending on new investment or capacity by energy companies, and (4) the associated indirect effects of the above. DOE based its analysis on the Impact of Sector Energy Technologies (ImSET) model developed by Pacific Northwest National La boratory (PNNL) for DOE’s Office of Energy Efficiency and Renewable Energy (EERE). 1 ImSET is an input/output model of the U.S. economy that estimates the effects of standards on major sectors of the economy related to buildings and the net impact of standards on jobs. ImSET’s i nput/output structure is based on the 1997 Benchmark U.S. table aggregated to 188 sectors to estimate the employment and income effects of building energy technologies. 2 In comparison with simple economic multiplier approaches, ImSET allows for more complete and automated analysis of the economic impacts of energy efficiency investments in buildings. In an input/output model, the level of employment in an economy is determined by the relationship of different sectors of the econom y and the spending flows among them. Different sectors have different levels of labor intensity, and changes in the level of spending (e.g., due to

15-1the effects of an amended energy conservation standard) in one sector of the economy will affect spending in other sectors, which in turn w ill affect the overall level of employment. ImSET uses a 188-sector model to predict the economic effects of residential and commercial buildings technologies. ImSET colle cts estimates of initial investments, energy savings, and economic activity associated with spending the savings resulting from amended standards (e.g., changes in final demand in personal consumption, business investment and spending, government spending). It provides overall estimates of the change in national output for each input-output sector. Then, the model applies estimates of employment and wage income per dollar of economic output for each sector a nd calculates impacts on national employment and wage income.

ImSET calculates the total effect of standa rds on employment, incl uding job creation or deletion in the manufacturing sect or. As described above, DOE an alyzed the direct employment impacts (i.e., those that would occur at the ma nufacturing plants of co mmercial refrigeration equipment) in the manufacturer impact analysis (see Chapter 13 of the TSD). Energy efficiency technology primarily a ffects the U.S. economy along three spending pathways. First, general investme nt funds are diverted to sectors that manufacture, install, and maintain energy efficient technologies. The in creased cost of technology leads to higher employment in the refrigeration equipment manufacturing sector, including commercial refrigeration equipment, and lower employment in other economic sectors. Second, commercial firm spending is redirected from utilities toward firms that supply commercial production inputs. Third, electric utility sector investment funds are released for use in other sectors of the economy. When customers use less energy, electric utilities experience re lative reductions in demand, which in turn leads to reductions in utility sector invest ment and employment.

15.3 RESULTS

The results show the total effects of amended energy conservation standards on employment for the selected years. Ta ble 15.3.1through Table 15.3.15 show the net national employment impacts of the amended CRE energy conservation standards for each of the 15 CRE products by Trial Standard Level (TSL) and spec ified years for the en tire CRE market. Table 15.3.1 Net National Change in Jobs for VOP.RC.M by TSL

Trial Standard Level 2012 Net National Change in Jobs 2022 2032 2042 1 2 3 4 5 0 0 -1 -1 -1 4 6 20 28 44 62 44 62 45 64 7 32 70 70 73

15-2Table 15.3.2 Net National Change in Jobs for VOP.RC.L by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 12 17 19 0 20 28 32 0 23 32 37 -1 33 47 53 -1 33 47 53 Table 15.3.3 Net National Change in Jobs for VOP.SC.M by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 10 15 17 0 29 41 47 -1 57 80 92 -1 57 80 92 -3 72 110 122 Table 15.3.4 Net National Change in Jobs for VCT.RC.M by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 1 1 2 0 4 6 7 -1 45 63 72 -1 45 64 73 -1 45 64 73 Table 15.3.5 Net National Change in Jobs for VCT.RC.L by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 65 91 105 -5 724 1016 1163 -8 1037 1455 1665 -9 1060 1487 1701 -9 1060 1487 1701 Table 15.3.6 Net National Change in Jobs for VCT.SC.I by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 16 23 27 0 43 60 69 -1 49 70 80 -1 51 74 83 -1 51 74 83

15-3Table 15.3.7 Net National Change in Jobs for VCS.SC.I by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 0 1 1 0 2 2 3 0 3 5 6 0 3 5 6 0 3 5 6 Table 15.3.8 Net National Change in Jobs for SVO.RC.M by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 53 75 85 -1 78 110 126 -1 156 219 251 -1 156 219 251 -16 263 373 426 Table 15.3.9 Net National Change in Jobs for SVO.SC.M by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 9 13 15 0 28 39 45 -1 60 85 97 -1 60 85 97 -3 76 119 131 Table 15.3.10 Net National Change in Jobs for SOC.RC.M by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 3 5 6 0 13 18 21 0 25 36 41 0 25 36 41 -3 84 124 140 Table 15.3.11 Net National Change in Jobs for HZO.RC.M by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 2 3 4 0 9 13 15 0 14 19 22 0 15 21 24 0 15 21 24

15-4Table 15.3.12 Net National Change in Jobs for HZO.RC.L by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 23 32 37 0 51 71 82 -1 59 83 95 -1 59 83 95 -1 59 83 95 Table 15.3.13 Net National Change in Jobs for HZO.SC.M by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 0 0 0 0 1 2 2 0 3 4 5 0 3 5 6 0 3 5 6 Table 15.3.14 Net National Change in Jobs for HZO.SC.L by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 1 2 2 0 5 7 8 0 12 18 20 0 13 21 23 0 13 21 23 Table 15.3.15 Net National Change in Jobs for HCT.SC.I by TSL

Trial Standard Level Net National Change in Jobs 2012 2022 2032 2042 1 2 3 4 5 0 3 5 5 0 29 41 47 0 31 44 50 -1 34 48 55 -1 34 48 55 As shown in Table 15.3.1 through Table 15.3.15, th e range of efficiency levels for the individual CRE product classes has virtually no initial impact on jobs and has a small positive impact on jobs in later years. This is further illustrated in Table 15.3.16, which provides the sum of employment impacts for comm ercial refrigeration equipment by TSL and the maximum total employment impact associated with the highest efficiency level for each CRE product class.

15-5Table 15.3.16 Net National Change in Jobs for all Commercial Refrigeration Equipment by TSL
Trial Standard Level 2012 Net National Change in Jobs 2022 2032 2042 1 2 3 4 5 0 -6 -15 -18 -40 202 289 1,056 1,482 1,618 2,275 1,658 2,337 1,856 2,645 332 1,699 2,603 2,670 3,011

As shown in the above tables , the proposed CRE standard s have virtually no initial impact on jobs and have a small positive impact on jobs in later years. This is explained by the fact that the required initial inve stment in the efficient equipment costs (a few) jobs because the investment is capital-intensive relative to othe r spending in the economy that would be displaced to pay for the investment. However, in the long term, the benefit to th e economy of the energy savings from the installed equipment more than makes up for the initial investment, and the net effect on employment is positive. The long-term positive and increasing impact occurs because the energy savings in future years are obtaine d from both current and previous efficiency investments reflected in the inst alled stock of efficient equipmen t while investment costs for the equipment occur only once. Also, employment in creases with higher efficiency levels because of the energy savings. Employment levels exhibit a decreasing rate of increase through time because the energy savings decrease through time as th e energy efficiency of the stock of equipment increases. The increasing efficiency of the stock results from sa les of the more efficient equipment and initial replacement of less efficient equipment. Over time, only new sales account for efficiency increases in the stock because the number of less efficient units being replaced declines to zero. Thus, the energy savings and resulting impact on the economy are greater initially, and then increase more slowly over time.

15-6REFERENCES

1. Roop, J.M., M.J. Scott and R.W. Schultz. 2005. ImSET: Impact of Sector Energy Technologies . PNNL-15273, Pacific Northwest Nati onal Laboratory, Richland, Washington.

2. Lawson, Ann M., K.S. Bersani, Mahnaz Fahi m-Nader, and Jiemin Guo. 2002. “Benchmark Input-Output Accounts of the U.S. Economy, 1997,” Survey of Current Business , December, pp. 19-117.

15-7