CHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

15.1 ASSUMPTIONS............................................................................................................... 15­1
 

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

15.3 RESULTS ......................................................................................................................... 15­2
 

REFERENCES .......................................................................................................................... 15­7
 

LIST OF TABLES

Table 15.3.1 Net National Change in Jobs for VOP.RC.M by TSL......................................... 15­2
 

Table 15.3.2 Net National Change in Jobs for VOP.RC.L by TSL.......................................... 15­3
 

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

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

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

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

Table 15.3.7 Net National Change in Jobs for VCS.SC.I by TSL............................................ 15­4
 

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

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

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

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

Table 15.3.12 Net National Change in Jobs for HZO.RC.L by TSL........................................ 15­5
 

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

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

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

Table 15.3.16 Net National Change in Jobs for all CRE Equipment by TSL .......................... 15­6
 

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CHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS

The U.S. Department of Energy (DOE) conducted the employment impact analysis to

estimate indirect national job creation or elimination resulting from proposed energy

conservation standards, due to reallocation of the associated commercial expenditures for

purchasing and distributing commercial refrigeration equipment (CRE). DOE estimated the

national impacts on major sectors of the U.S. economy using publicly available data and

incorporating different energy price 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 CRE­amended energy conservation standards to decrease

the national energy consumption, and therefore, reduce energy expenditures. 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 installation costs of commercial refrigeration equipment.

Using an input­output model of the U.S. economy, this analysis estimated the year­toyear effect of these expenditure impacts on net economic output and employment. DOE

intended this analysis to quantify 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 equipment as the net national change

in jobs in the general economy. The key factors affecting the outcome of net change in jobs are

(1) increased spending on the purchase and installation 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 Laboratory (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 input/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 economy 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

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the effects of an amended energy conservation standard) in one sector of the economy will affect

spending in other sectors, which in turn will affect the overall level of employment.

ImSET uses a 188­sector model to predict the economic 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 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 input­output sector. Then the model applies estimates of employment and wage income

per dollar of economic output for each sector and calculates impacts on national employment and

wage income.

ImSET calculates the total effect of standards on employment, including job creation or

deletion in the manufacturing sector. As described above, DOE analyzed the direct employment

impacts, i.e., those that would occur at the manufacturing plants of commercial refrigeration

equipment, in the manufacturer impact analysis (see Chapter 12 of the TSD).

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 technologies. The increased 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 relative reductions in

demand, which in turn leads to reductions in utility sector investment and employment.

15.3 RESULTS

The results show the total effects of amended energy conservation standards on

employment for the selected years. Tables 15.3.1 through 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 specified years for the entire 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

­1

­2

­2

­121

109 149

164 226

304 418

304 418

895 1,262

169

255

471

471

1,417

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Table 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 21 28 32

0 24 33 37

­3 41 57 64

­3 41 57 64

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 12 16 18

0 33 45 51

­1 62 86 97

­1 62 86 97

­12 120 158 179

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 2 2

0 5 6 7

­1 27 37 42

­5 49 69 77

­5 49 69 77

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 70 96 109

­4 767 1,054 1,189

­4 791 1,088 1,227

­76 1,263 1,757 1,979

­76 1,263 1,757 1,979

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 22 24

0 42 57 65

­3 64 89 100

­3 68 92 104

­3 68 92 104

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Table 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 5 7 8

0 5 7 8

0 5 7 8

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 60 83 94

­1 95 131 147

­1 182 251 283

­1 182 251 283

­64 499 703 790

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 10 14 16

0 31 42 48

­1 66 90 101

­1 66 90 101

­12 130 169 192

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 4 5 5

0 13 18 20

0 27 36 41

0 27 36 41

­17 110 149 168

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 20 22

0 15 21 24

0 15 21 24

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Table 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 24 33 37

0 52 72 81

­1 61 84 95

­1 61 84 95

­1 61 84 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 4 6 6

0 5 6 7

0 5 6 7

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

­1 17 23 26

­1 20 24 28

­1 20 24 28

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 30 41 47

0 32 44 50

0 36 49 55

0 36 49 55

As shown in Tables 15.3.1 through 15.3.15, the 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 commercial refrigeration equipment by TSL and the maximum total

employment impact associated with the highest efficiency level for each CRE product class.

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Table 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

­94

­315

324 448

1,270 1,744

1,680 2,312

2,204 3,047

3,317 4,607

505

1,970

2,606

3,434

5,187

As shown in the above tables, the proposed CRE standards 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 investment in the efficient equipment costs (a few) jobs because the

investment is capital­intensive relative to other spending in the economy that would be displaced

to pay for the investment. However, in the long term, the benefit to the 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 long­term positive and increasing impact occurs because

the energy savings in future years are obtained from both current and previous efficiency

investments reflected in the installed stock of efficient equipment while investment costs for the

equipment occur only once. Also, employment increases 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 the energy efficiency of the stock of equipment increases. The

increasing efficiency of the stock results from sales 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.

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REFERENCES
 

1.	 Roop, J.M., M.J. Scott and R.W. Schultz. 2005. ImSET: Impact of Sector Energy

Technologies. PNNL­15273, Pacific Northwest National Laboratory, Richland, Washington.

2.	 Lawson, Ann M., K.S. Bersani, Mahnaz Fahim­Nader, and Jiemin Guo. 2002. “Benchmark

Input­Output Accounts of the U.S. Economy, 1997,” Survey of Current Business, December,

pp. 19­117.

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