14-i CHAPTER

14. NET NAT IONAL EMPLOYMENT IMPACTS
TABLE OF CO NTENTS 14.1 INTRODUCTI ON
.................................................... 14-1 14.2 ASSUMPTIONS
..................................................... 14-1 14.3 METHODOLOGY
.................................................... 14-1 14.4 RESULTS
.......................................................... 14-2 14.4.1 Employment I

mpacts of Transformer Standards
....................... 14-2
LIST OF TABLE S Table 14.4.1 Net National Chang e in Jobs: Liquid-I mmersed T

ransfor mers ........... 14-4 Table 14.4.2 Net National Chang e in Jobs: Dr y- Typ e, Medium -Voltag e Transf ormers . . 14-4
LIST OF F IGURES Figure 14.4.1 Employment I mpacts: Liquid-I

mmersed Transformers
................. 14-3 Figure 14.4.2 Employment I mpacts: Dry-Ty

pe, Medium-Voltage Transformers
......... 14-314-1 CHAPTER

14. NET NAT IONAL EMPLOYMENT IMPACTS
14.1 INTRODUC TION The Department of Energy (DOE) conducted an employ ment impact analysis for the notice of proposed rulemak ing (NO PR). I

t designed the em

ploy ment impac

t analy sis to estima

te indirect national job creation or elimination resulting from possible standards, due to re allocation of the associated commercial expenditures for purcha sing and operating distribution tr an sf or me rs . T he De pa rt me nt es ti ma te d n at io na l i mp ac ts on ma jo r s ec to rs of

th e U .S . e co no my, using publicly ava

ilable data and incorporating differe nt energy price scenarios. The employment impact ana lysis did not evaluate direct e mployment impacts at manufacturers’ facilities; DOE considere d these impacts in the manufacturer impact analy sis (see Chapter 12 of this technical support document). 14.2 ASSUMPTIONS If promulgated, the

Department expects distribution transformer energy -efficiency standards to decrease energ y consumption, and theref ore to reduce energy

expenditures. The savings in energy

expenditures may be spent on new investment or not at all (i.e., they may remain “ saved”) . The stan dards ma y in crease the purchase pri ce of dis tribution t ransfor mers, 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 yea r-to-yea r effect of these expenditure impacts on net economic output and e mployment. The Department intended this analysis to quantify the indirect employ ment impacts of reduced expenditures for energy

and reallocation of that money toward other sectors of the economy
. 14.3 METHODOL OGY The Pacific Northwest National L aboratory developed a spreadsheet model for DOE of the U.S. e conomy

(IMB UIL

D II ), focus ing on the

sectors of the ec onomy

most rele vant to industrial, commercial, and residential building energ y use. 1 IMB UIL

D II was originally developed as a special-purpose version of the Impact Analy

sis for Planning (IMPL

AN) national in pu t- ou tp ut mo de l t o s pe ci fi ca ll y es ti ma te th e e mp lo yme nt an d i nc om e e ff ec ts of en er gyefficie ncy technolo gies. 2 IMPLAN is used by more than 1500 clients a t all levels of the government, in academia, and in the private sector ( http://www.implan.com/references.html). IMBUI LD II includes structural coef ficients to characterize economic flows among key sectors of the economy a

nd track the inter-industry employment impacts resulting f rom energy

-efficiency standards.14-2

Efficiency

standards are represented in I MBUIL D II by a combination of ca

pital investments and energy

savings. These capital investment and energ y savings dive

rt spending away f rom some business sectors and toward others. Accordingly, I MBUIL D II measures the economic effect of a standard a s (1) the expansion enjoyed by businesses that receive diverted funds, min

us (2) the contraction suffe

red by businesse s that lose

diverte d funds. IMBUI LD II includes a series of input tables that qua ntify the size of the capital investmen

ts and ene rgy savings resulting from ene rgy -effic iency

standar ds. These tables a lso designa te industr ial sectors that ma

nufactu re eff icient pr oducts (e .g., dis tribution t ransfor mers) and other sectors (including utilities) that lose sales as a result of e fficiency standards. In an input/output model, the level of employ ment in an economy is deter mined by the relationship of different sectors of the economy and the spending flows among them. Differ ent sectors have different levels of labor intensity , and so changes in the level of spending (e.g., resulting from an efficiency standard) in one sector of the economy will affect flows in other sectors, which affects the overall level of employment. For e

xample, distribution transformer standards may r

educe energy

expenditures and increase equipment prices in the utility sector and the commercial and industrial sectors. These expenditure chang es are likely to reduce employment in these sectors. A t the same time, transformer standards may increase commercial and industrial sector investment, and thus increase employ ment in other sectors of the economy
. The Department designed the employ ment impact analysis to estimate the y ear-to-y ear net employ ment eff ect of th ese diff

erent expenditure

flows. IMBUI LD calculates the total ef fect of standards on employ ment, including job creation or deletion in the manufacturing, commercial, industrial, and r etail sectors of the economy , not including transformer manufacturer s. Direct employment impacts, i.e., those that would occur at transformer manufacturing plants, ar e considered in the manufacturer impact a nalysis (Chapter 12).
14.4 RESULTS 14.4.1 Employm ent Impa cts of Trans former Standards Energy -efficiency

standards for transformers are e xpected to reduce electricity bills for commerc ial and industrial c ustomers, while increasing the costs of trans formers . This shif t in spending has bene ficial imp lications for net national e

mploy ment. The

electri c utility

sector is more capital-intensive and less labor-intensive than other sectors. A shift in spending away from payments of ele ctricity bills into other sectors is expected to incre ase employment. A pr evious study concluded: “B y shifting ec onomic activity away from energy

supply and by

saving co ns um er s a nd bu si ne ss es mo ne y th at wi ll be re -s pe nt th ro ug ho ut th e e co no my, en er gyefficiency improvements will result in a net increase in jobs and personal income.” 3 Energy savings from nati onal ene

rgy -effic iency

standar ds for tra nsforme rs are d iffuse, spread a

mong all14-3 Figure 14.4.1 Employment Impacts: Liquid-Imm ersed Transformers commerc ial and industrial c ustomers, and small r

elative t o total na tional expe

nditures , so employ ment impac

ts are sma

ll relative to total national e mploy ment. Figur es 14.4.1 and 14.4. 2 show the estimate d net nati onal empl oyment impacts of the si x different trial standard levels (TSL s) for the two distribution transformer superclasses: liquidimmersed and dry -ty pe, mediu m-voltag e transf

ormers, respectively . These tr ial standa rd level s are presented in grea

ter detail in the descriptions of the analyses of shipments (Chapter 9) and national energy

savings and net present value (Chapter 10) . The figures show, for any given year, the change in the number of jobs in the economy relative to the number of jobs if there were no change in standards (and thus no resulting c hange in spending and cash flow pa tterns throughout the economy

). Similarly, Tables 14.4.1 and 14.4.2 show the ne t national employment impact of the tran sformer

standar ds, by standar d level, f or speci fied y

ears.14-4 Figure 14.4.2 Employment Impacts: Dr y-Type, Medium-Voltage Transformers

Table 14.4.1 Net Nat

ional Change

in Jobs: Liquid-Imme rsed Trans former s Trial Standard Level Net Nat ional Change

in Jobs (in tho usands) 2015 2020 2030 2038 1 0.9 1.6 3.2 4.7 2 1.1 2.1 4.3 6.4 3 1.2 2.4 5.1 7.7 4 3.0 2.6 5.8 8.7 5 1.9 4.8 11.7 18.2 6 -0.3 3.3 11.6 19.4
Table 14.4.2 Net Nat

ional Change

in Jobs: Dr

y-Type, M edium-Voltage Tr ansforme rs Trial Standard Level Net Nat ional Change

in Jobs (in tho usands) 2015 2020 2030 2038 1 0.1 0.1 0.2 0.3 2 0.1 0.2 0.3 0.514-5

3 0.1 0.2 0.5 0.7 4 0.2 0.3 0.7 1.0 5 0.2 0.4 0.9 1.4 6 0.2 0.4 0.9 1.4 As shown in Figures 14.4.1 and 14.4.2, distribution transformer standards for the two transformer superclasses have an initial neg ative impact on jobs, caused by the shift in spending toward tr ansformer manuf

acture rs. I n later y ears, the standa

rds have a positive

impact on

jobs, due to the shift in spe

nding a way from the e lectric ity s ector, w ith its low e

mploy ment inten sity (jobs per dollar expenditure), and toward other sectors of the economy, with hig

her employment intensity. The liquid-immersed transforme r standard involves relatively high investment expenditures and leads to relatively larger employ

ment impacts, compared to the dry-type, medium-voltage transformer standard.14-6 REFEREN CES 1. Scott, M. J., J. M. Roop, and R. W. Schultz
. ImBuild II: Impact of Technologies on Energy E fficienc y Program

s. Ju ne , 2 00 2. Pa ci fi c N or th we st Na ti on al Lab or at or y. Richl and, W A. Rep ort No . PNNL-1 3926. Prepa red for the U. S. Dep artme nt of E nergy under Contract DE-AC06-76RLO1830. <http://www.pnl.gov/main/publications/external/technical_reports/PNNL-13926.pdf > 2. Minnesota IMPLA N Group Inc. IMPLAN Professional: User's Guide, Analysis Guide, Data Guide. 1997. Stillwater, MN. 3. Massachusetts Energy Efficiency

Council. The Energy Efficiency Industry and the Massachusetts Economy. December, 1992.