CHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

15.1 INTRODUCTION ............................................................................................................ 15 -1 15.2 METHOD .................................................................................................................... ..... 15-1 15.3 RESULTS ................................................................................................................... ...... 15-2

LIST OF TABLES

Table 15.3.1 Net National Change in Jobs for IRL by TSL and Scenario ............................... 15-4 Table 15.3.2 Net National Change in J obs for GSFL by TSL and Scenario ............................ 15-4

LIST OF FIGURES

Figure 15.3.1 Net National Change in Jobs for IRL Trial Standard Levels for 2012-2042 for the Existing Technologies, Shift, R-CFL Substitution ........................................................................................................ 15-3 Figure 15.3.2 Net National Change in Jobs for GSFL Trial Standard Levels for 2012-2042 for the Existing Technologies, Shift, High Lighting Expertise Scenario ............................................................................................. 15-3

15-iCHAPTER 15. NET NATIONAL EMPLOYMENT IMPACT ANALYSIS

15.1 INTRODUCTION

The Departm ent defines net national empl oyment impacts from improved efficacy standards for incandescent reflector lamps (IRL) and general service fl uorescent lamps (GSFL) as net jobs created or eliminated in the ge neral economy as a consequence of: (1) increased spending on the purchase and installation of new a ppliances; (2) reduced spending on electricity; (3) reduced spending on new inve stment or capacity by energy companies; (4) changes in operation and maintenance costs; and (5) the a ssociated indirect e ffects of the above.

Employment impacts include direct and indir ect impacts. Direct employment impacts are any changes in the number of employees of IR L and GSFL manufacturers, their suppliers, and related service firms (See Chapter 13 of the TSD). Indirect impacts are those changes of employment in the larger economy that occur due to the shift in expenditures and capital investment that is caused by the purchase and operation of more efficient IRL and GSFL products. This chapter addresses the indirect employment impacts.

15.2 METHOD

The Department based its analysis on an input/output model of the U.S. economy that estimates the effects of standards on major sector s of the economy related to buildings and the net impact of standards on jobs. The Pacifi c Northwest National Laboratory developed the model, ImSET 1 (which stands for Im pact of S ector E nergy T echnologies) as a successor to ImBuild 2 , a special-purpose version of the IMPLAN 3 national input/output model. ImSET estimates the employment and income effects of building energy technologies. In comparison with simple economic multiplier approaches, ImSET allows for more complete and automated analysis of the economic impacts of ener gy-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 econom y and the spending flows among them. Different sectors have different levels of labor intensity and so changes in the level of spending (e.g., due to the effects of an efficacy standard) in one se ctor of the economy will affect flows in other sectors, which affects the overall level of employment.

ImSET uses a 188-sector model of the nationa l economy to predict the economic effects of residential and commercial buildings technologies. ImSET collects estimates of initial investments, energy savings, and economic activ ity associated with spending the savings resulting from standards (e.g., changes in fi nal demand in personal consumption, business investment and spending, and government spending) . It provides overall estimates of the change in national output for each input-output sector. The model applies estimates of employment and wage income per dollar of economic output for each sector and calcula tes impacts on national employment and wage income.

Energy-efficiency technology primarily a ffects the U.S. economy along three spending pathways. First, general investment funds are dive rted to sectors that manufacture, install, and

15-1maintain energy-efficient appliances. The incr eased cost of appliances leads to higher employment in the appliance manufacturing sect ors and lower employment in other economic sectors. Second, commercial firm and residential spending are redirected 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 demand which lead s to reductions in utili ty sector investment and employment.

15.3 RESULTS

The results in this se ction refer to impact s on employment for the selected years of the standards relative to the base case for each product. A total of five trial standard levels (TSLs) are modeled for each of the two lamp technol ogies, IRL and GSFL. In addition, for each technology, the two scenarios that bo und the NIA results are evaluated:

 For IRL, DOE evaluated Existing Technologies, Shift, R-CFL Substitution scenario and the Emerging Technologies, Roll-up, BR Lamp Substitu tion scenario as the high and low range energy savings estimates, respectively.

 For GSFL, DOE evaluated the Existing Tec hnologies, Shift, High Lighting Expertise scenario and the Emerging Technologies, Roll-up, Market Segment-Based Lighting Expertise scenario as the high and low range energy savings estimates, respectively..

For additional discussion of the formulation of these scenarios, see TSD Chapter 10.

Figure 15.3.1 illustrates the estimated net nati onal employment impacts of the five different trial standard levels (TSLs) for IR L under the Existing Technologies, Shift, R-CFL Substitution scenario. A detailed discussion of the TSLs can be found in Chapter 9 of the TSD. The figure shows, for a given year over the analysis period (2012-2042), the change in the number of jobs in the economy relative to the numb er of jobs if there were no change in efficacy standards. Figure 15.3.2 illustrates the estimated net national empl oyment impacts of the five different trial standard levels (TSLs) for th e GSFL equipment under the Existing Technologies, Shift, High Lighting Expertise sc enario. The indirect employme nt impacts due to amended IRL efficacy standards are considerably smaller due to the correspondingly smaller estimates of energy savings associated with their adoption.

15-2Figure 15.3.1 Net National Change in Jobs for IRL Trial Standard Levels for 2012-2042 for the Existing Technologies, Shift, R-CFL Substitution

Figure 15.3.2 Net National Change in Jobs fo r GSFL Trial Standard Levels for 2012-2042 for the Existing Technologies, Shift , High Lighting Expertise Scenario

15-3Similarly, Table 15.3.1 and Table 15.3.2 show the net national employment impacts of the amended IRL and GSFL efficacy standards by trial standard level and for the two scenarios that bound the NIA results.

Table 15.3.1 Net National Change in Jobs for IRL by TSL and Scenario

Jobs (thousands) 2012 2022 2032 2042 Existing, Shift, R-CFL Substitution Scenario TSL 1 0.0 0.9 1.3 1.7 TSL 2 0.6 2.5 3.2 4.3 TSL 3 1.0 3.9 5.2 6.9 TSL 4 1.0 5.3 7.0 9.5 TSL 5 1.0 6.1 8.2 10.4 Emerging, Roll-up, BR Lamp Substitution Scenario TSL 1 -0.1 0.4 0.5 0.7 TSL 2 0.5 1.6 1.8 2.5 TSL 3 0.9 3.1 3.4 4.8 TSL 4 0.8 3.8 4.2 6.0 TSL 5 0.8 4.5 5.3 6.8

Table 15.3.2 Net National Change in Jobs for GSFL by TSL and Scenario

Jobs (thousands) 2012 2022 2032 2042 Existing, Shift, High Lighting Expertise Scenario TSL 1 1.3 7.5 11.1 12.0 TSL 2 1.3 7.7 11.4 12.2 TSL 3 2.8 9.4 14.0 15.1 TSL 4 7.8 13.6 18.2 18.4 TSL 5 9.2 14.5 19.3 19.6 Emerging, Roll-up, Market Segment Based Scenario TSL 1 0.2 3.9 5.5 6.5 TSL 2 1.3 3.8 4.5 5.5 TSL 3 1.5 9.2 10.6 10.7 TSL 4 3.9 12.2 13.6 13.3 TSL 5 4.3 16.1 16.7 15.5

As shown in the above tables, the proposed IRL and GSFL efficacy standards have a small positive impact on jobs, representing well less than 0.1 percent of to tal U.S. employment. The long-term positive and increasing impact occu rs because the energy savings in future years

15-4are obtained from both current a nd previous efficiency investments reflected in the installed stock of efficient equipment, while investme nt costs for the equipment occur only once.

In conclusion, DOE estimates that net indire ct employment impact s from a proposed IRL and GSFL efficacy standard are relatively small but positive, as shown in Table 15.3.1 and Table 15.3.2, respectively.

15-515-6 REFERENCES

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

. Pacific Northwest National Laboratory. July 2005.

2 Scott, M. J., D. J. Hostick, and D. B. Belzer, ImBuild: Impact of Building Energy Efficiency Programs , April, 1998. Pacific Northwest Nationa l Laboratory. Richland, WA. Report No. PNNL-11884. Prepared for the U.S. Departme nt 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.