13

- i CHAPTER 1 3 . EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

13.1 INTRODUCTION

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

- 1 13.2 METHODOLOGY

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

- 113-1 CHAPTER 13. EMPLOYMENT IMPACT AN ALYSIS

13.1 INTRODUCTION

The U.S. Department of Energy (DOE) utilizes t he employment impact analysis to estimate national job creation or elimination resulting from p roposed new energy efficiency standards . New standards may result in the reallocation of expenditures for purchasing and operating equipment

. DOE will conduct this analysis in preparation for the notice of proposed rulemaking. DOE will estimate national employment impacts on major sectors of the U.S. economy, using publicly available data and incorporating various energy price scenarios

. DOE will make all methods and documentation available for review.

The imposition of standards can affe ct employment both directly and indirectly. Direct employment effe cts are changes in the number s of employees at the plants that produce the covered equipment , along with affiliated distribution and service companies. DOE will evaluate direct employment effe cts as part of its manufa cturer impact analysis, as described in Chapter 12

. Indirect employment effe cts from the imposition of standards may reflect expenditures that are shift ed between goods (the substitution effect) and changes in income and overall expenditure levels (the inc ome effect).

DOE expects new equipment standards to decrease energy consumption, and therefore to

r educe expenditures for energy. The savings in energy expenditures may be spent on n ew investment and other items. The standards also may increase the purch ase 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, th e employment impact analysis seeks to estimate the year

- to

- year effect of expenditure impacts on net e conomic output and employment. A simple model might involve reduced expenditures for energy and reallocation of that money toward other sectors of the economy. DOE intends the employment impact analysis to quantify the indirect employment effe cts of changes in expenditure s

. It will evaluate direct employment effe cts in the manufacturer impact analysis ( Chapter 12 of the Technical Support Document )

.

13.2 METHODOLOGY
To investigate combined direct and indirect employment impacts from new standards

, DOE will use the Pacific Northwest National Laboratory ’s (PNNL ’s ) Impac t of Sector Energy Technologies (ImSET) model. 1 PNNL developed ImSET

, a spreadsheet model of the U.S.
economy that focus es on 1 87 sectors most relevant to industrial, commercial, and residential building energy use

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

. ImSET is a special

- purpose version of the U.S. b enchmark n ational i nput

- o utput (I

- O) model, designed to estimate the national employment and income effects of energy saving t echnologies that are13-2 deployed by DOE’s Office of Energy Ef ficiency and Renewable Energy. In comparison with versions of the model used in earlier rulemakings, th e current version allows for more complete and automated analysis of the essential features of energy efficiency investments in buildings, industry, transportation, a nd the electric power sectors. The ImSET software includes a

c omputer

- based I

- O model that ha s structural coefficients to characterize economic flows among the 188 sectors. ImSET’s national economic I

- O structure is based on the 2003 Benchmark U.S. table, 2 specially aggregated to 18 7 sectors.
DOE intends to use the ImSet model to estimate changes in employment, industry output, and wage income in the overall U.S. economy resulting from standards

- related changes in expenditures in various sectors of the economy. F or example, standards for residential clothes washer s may reduce energy expenditures and increase equipment prices for consumers . Th o se expenditure changes are likely to re duce energy sector employment. At the same time, the standards may increase investment

. DOE designed the employment impact analysis to estimate the year

- to

- year net national employment effect of the various expenditure flows associated with each potential l y new efficiency standard

.13-3 REFERENCE

1 Roop, J.M., M. J. Sc ott, and R. W. Schultz (2005), ImSET: Impa ct of Sector Energy Technologie

. Pacifi c Northwest National Laboratory. Richland WA. Report No. PNNL

15273.

2 Lawson, A

. M., K.S. Bersani, M. Fahim

- Nader, and J. Guo (December 2002), “ Benchmark Input

- Output Acco unts of the United States, 1997 ,” Survey of Current Business

, pp. 19

- 11 0

. (Last accessed March 29, 2010.) http://www.bea.gov/scb/pdf/2002/12December/1202I

- OAccounts2.pdf