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** 

**15­i 15­ii** 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**  **year­to**

**year 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**

**15­1 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**

**15­2**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** 

**15­3**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** 

**15­4**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.**

**15­5**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.**

**15­6**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.** 

**15­7**