16

- i CHAPTER 1 6 . EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

16.1 INTRODUCTION

................................ ................................ ................................ ......... 16

- 1 16.2 METHODOLOGY

................................ ................................ ................................ ........ 16

- 116-1 CHAPTER 16. EMPLOYMENT IMPACT AN ALYSIS

16.1 INTRODUCTION

The U.S. Department of Energy’s ( DOE ’s ) employment impact analysis estimate s indirect national job creation or job elimination resulting from possible new energy conservation standards, due to reallocation of the associated expenditures for purchasing and operating certain equipment. DOE conduct s this analysis for the notice of proposed rulemaking (NOPR) stage where it estimate s national impacts on major sec tors of the U.S. economy, using publicly available data.

Energy conservation standards can impact employment both directly and indirectly. Direct employment impacts are changes in the number of employees at the plants that produce the covered equipment

, along with the affiliated distribution and service companies, resulting from standards. DOE evaluate s direct employment impacts in its manufacturer impact analysis, as described in c hapter 12 of this Technical Support Document

. The employment impact analys is described in this chapter covers indirect employment impacts which may result from expenditures shifting between goods (the substitution effect) and changes in income and overall expenditure levels (the income effect) that occur due to the implementatio n of standards.

DOE expects new or amended energy conservation standards to decrease energy consumption and

, therefore

, reduce expenditures for energy. In turn, savings in energy expenditures may be redirected for new investment and other items. Notwithst anding, energy conservation standards may potentially increase the purchase price of equipment , including the retail price plus sales tax, and may increase installation costs.

Using an input

- output model of the U.S. economy, the employment impact analysis seeks to estimate the year

- to

- year effect of these expenditure imp acts on net national employment. DOE intends the employment impact analysis to quantify the indirect employment impacts of these expenditure changes.

16.2 METHODOLOGY

To investigate the and indi rect employment impacts, DOE use s the Pacific Northwest National Laboratory ’s (PNNL ’s ) “ Impact of Sector Energy Technologies ” (ImSET 3.1.1 ) model. 1 PNNL developed ImSET

, a spreadsheet model of the U.S. economy that focus es on 18 7 sectors most relevant to industrial, commercial, and residential building energy use

, for DOE’s Office of Energy Efficiency and Renewable Ene rgy

. ImSET is a special

- purpose version of the U.S. Benchmark National Input

- Output (I

- O) model, which has been designed to estimate the national employment and income effects of energy saving technologies that are deployed by DOE’s Office of Energy Effici ency and Renewable Energy. In comparison with the previous versions of the model used in earlier rulemakings, this version allows for more complete and automated analysis of the essential features of energy efficiency investments in buildings, industry, tr ansportation, and the electric power sectors.16-2 The ImSET software includes a c omputer

- based I

- O model with structural coefficients to characterize economic flows among the 18 7 sectors. ImSET’s national economic I

- O structure is based on the 2002 Benchmark U.S. table

, specially aggregated to 18 7 sectors. 2

DOE intends to use the ImSet model to estimate changes in e mployment in the overall U.S. economy resulting from changes in expenditures in the various sectors of the economy. DOE has designed the employment impact analysis to estimate the year

- to

- year net national employment effect of these different expenditure flows.16-3 REFERENCES

1. Roop, J. M., M. J. Scott, and R. W. Schultz, ImSET: Impact of Sector Energy Techn ologies , 2005. Pacific Northwest National Laboratory. Richland, WA. Report No. PNNL

- 15273. < http://www.pnl.gov/main/publications/external/technical_reports/PNNL

15273.pdf >

2. Lawson, A. M., K. S. Bersani, M. Fahim

- Nader, and J. Guo, Benchmark Input

- Output Accounts of the U. S. Economy, 1997

. Survey of Current Business , 2002: pp. pp. 19

- 117

< http://www.bea.gov/scb/pdf/2002/12December/1202I

- OAccounts2.pdf >