13

- i CHAPTER 1 3

. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

13.1 INTRODUCTION

................................ ................................ ................................ ......... 13

- 1

13.2 ASSUMPTIONS

................................ ................................ ................................ ............ 13

- 1

13.3 METHODOLOGY

................................ ................................ ................................ ........ 13

- 1

13.4 RESULTS

................................ ................................ ................................ ...................... 13

- 2

LIST OF TABLES

Table 13.4.1 CACHP and Furnace Net National Change in Employment

............................. 13

- 4

Table 13.4.2 CACHP and Furnace Off

- Mode Net National Change in Employment

............ 13

- 7

LIST OF FIGURES

Figure 13.4.1 CACHP and Furnace Employment Impact of Increased Equipment Cost

........ 13

- 3 Figure 13.4.2 CACHP and Furnace Employment Impact of Operating Cost Savings

............ 13

- 3 Figure 13.4.3 CACHP and Furnace Net National Change in Employment

............................. 13

- 4 Figure 13.4.4 CACHP and Furnace Off

- Mode Employment Impact of Increased Equipment Cost

................................ ................................ ................................ .. 13

- 5 Figure 13.4.5 CACHP and Furnace Off

- Mode Employment Impact of Operating Cost Savings

................................ ................................ ................................ ............... 13

- 6 Figure 13.4.6 CACHP and Furnace Off

- Mode Net National Change in Employment

............ 13

- 613

- 1 CHAPTER 13. EMPLOYMENT IMPACT AN ALYSIS

13.1 INTRODUCTION

DOE conducted an employment impact analysis for the final rule . DOE’s employment impact analysis is designed to estimate indirect national job creation or elimination resulting from possible standards, due to reallocation of the associated expenditures for purchasing and operating residential refrigeration products.

13.2 ASSUMPTIONS

DOE expects energy conservation standards to decrease energy consumption, and therefore to reduce energy expenditures. The savings in energy expenditures may be spent on new investment or not at all (i.e., th ey may remain “saved”). The standards may increase the purchase price of appliances , including the retail price plus sales tax, and increase installation

costs.

Using an input/output econometric model of the U.S. economy, this analysis estimated the y ear

- to

- year effect of these expenditure impacts on net economic output and employment. DOE intends this analysis to quantify the indirect employment impacts of these expenditure changes. It evaluated direct employment impacts at manufacturers’ facilities in the manufacturer impact analysis (see Chapter 12 ).

13.3 METHODOLOGY

The Department based its analysis on 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 impa ct of standards on jobs. The Pacific Northwest National Laboratory developed the
model, ImSE T 3. 1. 1 1 ( Im pact of S ector E nergy T echnologies) as a successor to ImB uild 2 , a special

- purpose version of the IMPLAN 3 national input/output model. Im SET esti mates the employment and income effects of building energy technologies. In comparison with simple economic multiplier approaches, Im SET 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 economy and the spending flows among them. Different sectors have different levels of labor intensity and so changes in the leve l of spending (e.g., due to the effects of an efficiency standard) in one sector of the economy will affect flows in other sectors, which affects the overall level of employment.

ImSET uses a 187

- sector model of the national economy to predict the econom ic effects of residential and commercial buildings technologies. ImSET collects estimates of initial investments, energy savings, and economic activity associated with spending the savings resulting from standards (e.g., changes in final demand in personal consumption, business investment and spending, and government spending). It provides overall estimates of the change13

- 2 in national output for each input

- output sector. The model applies estimates of employment and wage income per dollar of economic output f or each sector and calculates impacts on national employment and wage income.

Energy

- efficiency technology primarily affects the U.S. economy along three spending pathways. First, general investment funds are diverted to sectors that manufacture, install, and maintain energy

- efficient appliances. The increased cost of appliances leads to higher employment in the appliance manufacturing sectors and lower employment in other economic sectors. Second, commercial firm and residential spending are redir ected from utilities toward firms that supply production inputs. Third, electric utility sector investment funds are released for use in other sectors of the economy. When consumers use less energy, electric utilities experience relative reductions in dema nd which leads to reductions in utility sector investment and employment.

13.4 RESULTS

The results in this section refer to impacts of CACHP and furnace product standards

relative to the respective base case s for the two types of products for each trial standa rd level.

. DOE dis aggregated the impact of standards on employment into t wo component effects : increased capital investment costs and changes in operations and maintenance costs (including significant decreases in energy costs)

.

In addition, this sectio n presents impacts of the standards for off

- mode power, which has its own

set of trial standard levels.

Figures 13.4.1 s ummarize s the employment impacts of the increased investment and spending on higher

- efficiency equipment to meet the CACHP and furna ce products trial standard

levels

. Although appliance manufacturing is relatively capital

- intensive compared to other sectors of the economy, construction, installation, and activities contributing to wholesale and retail markups are labor

- intensive, the net result is a moderate increase in national employment.13

- 3 Figure 13.4.1 CACHP and Furnace Employment Impact of Increased Equipment Cost

Figure 1 3 .4. 2 show s the employment impact of redirected spending made possible by appliance operating cost saving s. In this case, the employment impact is strongly positive.

Figure 13.4.2 CACHP and Furnace Employment Impact of Operating Cost Savings 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0

2012 2017 2022 2027 2032 2037 2042Incremental Jobs (thousands)

Year TSL 1

TSL 2

TSL 3

TSL4

TSL 5

TSL 6

TSL 7

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

2012 2017 2022 2027 2032 2037 2042Incremental Jobs (thousands)

Year TSL 1

TSL 2

TSL 3

TSL 4

TSL 5

TSL 6

TSL 713

- 4 Figure 13 .4. 3 show s the estimated net national employment impacts of the CACHP and

furnace trial standard levels. For any gi ven year, these figures show the net change in the number of jobs in the economy relative to if there were no change in standards (and thus no resulting change in spending and cash flow patterns throughout the economy). These figures show the

combined effe cts of equipment cost, operations and maintenance cost, and energy use changes

due to standards.

Figure 13.4.3 CACHP and Furnace Net National Change in Employment

Table 1 3 .4.1 show s the net national employment impact in specific years for each product . The initial increase in net employment mainly is caused by the investment in early years, while the impacts of operating cost savings from reduced energy use build up slowly over time, resulting in a net positive impact on employment in later years.

Table 13.4.1 CACHP a nd Furnace Net National Change in Employment

TSL Net National Change in Employment ( Thousands of Jobs)

2016 2020 2025 2030 2035 2040) 2045

1 0.3 0.6 1.0 0.8 0.8 0.6 0.5

2 1.0 2.0 3.0 3.1 3.0 2.9 2.7

3 1.9 3.9 5.4 6.1 6.4 6.3 6.1

4 2.7 4.7 6.0 6.5 6.7 6.5 6.3

5 2.6 4.9 6.5 6.9 7.0 6.7 6.3

6 6.7 12.0 16.0 17.6 18.7 19.0 18.5

7 26.0 44.2 60.2 68.3 75.7 79.7 81.4 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

2012 2017 2022 2027 2032 2037 2042Incremental Jobs (thousands)

Year TSL1

TSL2

TSL3

TSL 4

TSL 5

TSL 6

TSL713

- 5 The investment required to meet the off

- mode trial standard levels is a small fraction of the amount required to meet the trial standard levels that apply to energy consumption when the CACHP and furnace products are operating. In addition, the energy savings are commensurately smaller. All of the additional investment required to meet off

- mode product standards is

assumed to be spent for additional manufacturing cost, which is capital intensive and generates only a few extra jobs in the economy. The impacts of redirected expenditures are very small, as shown in Figures 13.4.4

- 13 .4.6 and in.Table 13.4.2. In Figure 13.4.4, the im pacts of TSL 1 and TSL 2 are so close together that they appear as the same line.

Figure 13.4.4 CACHP and Furnace Off

- Mode Employment Impact of Increased Equipment Cost 0.00 0.01 0.01 0.02 0.02 0.03 0.03 0.04 0.04 0.05

2012 2017 2022 2027 2032 2037 2042Incremental Jobs (thousands)

Year TSL 1

TSL 2

TSL 313

- 6 Figure 13.4.5 CACHP and Furnace Off

- Mode Employment Impact of Operating Cost Savings

Figure 13.4.6 CACHP and Furnace Off

- Mode Net National Change in Employment 0.00 0.20 0.40 0.60 0.80 1.00 1.20

2012 2017 2022 2027 2032 2037 2042Incremental Jobs (thousands)

Year TSL 1

TSL 2

TSL 3

0.00 0.20 0.40 0.60 0.80 1.00 1.20

2012 2017 2022 2027 2032 2037 2042Incremental Jobs (thousands)

Year TSL1

TSL2

TSL313

- 7 Table 13.4.2 CACHP and Furnace Off

- Mode Net National Change in Employment

TSL Net National Change in Employment ( Thousands of Jobs)

2016 2020 2025 2030 2035 2040) 2045

1 0.05 0.17 0.32 0.46 0.60 0.71 0.80

2 0.05 0.18 0.35 0.50 0.64 0.76 0.86

3 0.08 0.23 0.42 0.59 0.76 0.90 1.0213

- 8 REFERENCES

1. M. J. Scott , O.V. Livingston, J.M. Roop, R.W. Schultz, and P.J. Balducci, ImSET 3.1: Impact of Sector Energy Technologies; Model Description and User’s Guide,

http://www.pnl.gov/main/publications/external/technical_reports/PNNL

- 18412.pdf 2009.

Available at:

2. Scott, M. J., D. J. Hostick, and D. B. Belzer, ImBuild: Impact of Building Energy Efficiency Programs, April, 1998. Pacific Northwest Nat ional Laboratory. Richland, WA. Report No. PNNL

- 11884. Prepared for the U.S. Department of Energy under Contract

DE

- AC06

- 76RLO 1830.

3. Minnesota IMPLAN Group Inc., IMPLAN Professional: User's Guide, Analysis Guide,

Data Guide , 1997. Stillwater, MN.