The second edition of the World Energy Employment report arrived at a time of extreme flux in the global energy sector. The last three years saw the Covid-19 pandemic precipitate sweeping layoffs, including in the energy industry, followed by the global energy crisis. Governments pursued urgent measures to ensure energy security, including unprecedented financial support for clean energy. Clean energy investment has grown by 40% over the past two years, creating strong demand from leading energy firms to bring on more workers in clean sectors. Still, the fragile global economic recovery and fresh geopolitical uncertainties continue to cast a shadow over the outlook for the industry and workers. Some regions continue to face tight labour markets and high interest rates, contributing to cautious hiring in parts of the energy sector. The World Energy Employment (WEE) 2023 report tracks employment trends over the entire energy supply chain through this turbulent period — by fuel, technology, sector, and region. The following trends can be observed:
- More people work in the energy sector today than in 2019, almost exclusively due to growth in clean energy, which now employs more workers than fossil fuels. Energy employment reached nearly 67 million in 2022 — growing by 3.4 million over pre-pandemic levels. Clean energy sectors added 4.7 million jobs globally over the same period and stand at 35 million, while fossil fuels jobs recovered more slowly after layoffs in 2020 and remain around 1.3 million below pre-pandemic employment levels, at 32 million. As a result, clean energy employment surpassed that of fossil fuels in 2021. More than half of job growth in this period is attributable to just five sectors: solar PV, wind, electric vehicles (EVs) and battery manufacturing, heat pumps and critical minerals mining. These five sectors employ around 9 million workers today. Solar PV is the largest of these sectors, at around 4 million jobs, while manufacturing of EVs and their batteries was the largest source of growth, adding globally well over 1 million jobs since 2019. Many of the new jobs are in construction and manufacturing, which represent over half of energy jobs today, and grew by 2.6 million jobs since 2019.
- The uptick of clean energy jobs occurred in every region of the world, with China’s energy workforce undergoing an unprecedented reorientation toward clean energy. Clean energy jobs were the major driver of energy job growth in virtually all parts of the world over the last three years, but several regions also saw fossil fuel employment rise above 2019 levels, notably India, Indonesia, and the Middle East. In regions that saw declines in fossil fuel jobs from 2019-22, clean energy outweighed these losses in all but a few, notably Russia and North Africa. China, home to the largest energy workforce today with nearly 30% of the global total, witnessed the largest rebalancing over the 2019-22 period, with clean energy jobs growing by 2 million and fossil fuel-related jobs falling by 600 000, largely in coal. Today, 60% of China’s energy workforce is employed in clean sectors, compared to just over 50% in 2019. China’s build out of clean tech manufacturing has been a major source of employment growth. China’s clean energy manufacturing sectors employ roughly 3 million workers, accounting for 80% of solar PV and EV battery manufacturing jobs globally.
- Amid the many positive trends emerging for clean energy employment, skilled labour shortages are already plaguing the sector and require attention. The energy sector needs higher skilled workers than most other industries — 36% of energy jobs are within high-skilled occupations by International Labour Organization definitions, compared with 27% in the broader economy. Job vacancy rates, a key indicator of labour shortages, have been rising for years in many major economies in the construction, manufacturing, utility and other energy-related sectors. Construction occupations, which make up nearly half of new energy-related jobs to 2030 on a path to net zero, are facing particularly acute shortages, limiting the availability of labour needed to install clean energy technologies and retrofit buildings.
- A proprietary survey of over 160 energy companies conducted by the IEA indicates that installation and repair work positions were the number one occupation segment for which respondents had the greatest difficulty hiring. This was mostly due to a lack of industry-specific knowledge. Developing a sufficiently large and skilled local workforce is an imperative in every region, as most energy jobs are tied to the location where installations are developed. Roughly 60% of energy jobs today cannot be offshored.
- The number of workers pursuing degrees or certifications relevant to energy sector jobs are not keeping pace with growing demand. Science, technology, engineering and mathematical degrees relevant to the energy sector are not rising fast enough to meet demand for new workers with these credentials. The gap is even more severe for vocational jobs. Conferrals of certifications relevant to energy, such as electricians and heating technicians, have flatlined in the United States and the European Union, and in China they fell by around 9% per year in the years leading up to the pandemic. Meanwhile, jobs demanding these certifications are projected to grow by around 8% per year through 2030 on a net zero aligned pathway. Clean energy training programmes are becoming more available — for instance 19 of the G20 members have training courses for solar PV installers — but governments must address direct and indirect costs borne by workers pursuing retraining if this skilled labour gap is to be closed. Cultivating a skilled labour pool should be considered a key strategic pillar for regions looking to be competitive in new clean energy industries, as is attracting more women, who represent 15% of the energy workforce today.
- Many fossil fuel workers have the skills and specialisations needed to fill clean energy roles. We estimate that half of workers in fossil fuel sectors who face redundancy risks this decade have skills demanded by growing clean energy sectors. Many of these workers could switch into new roles with around four weeks of additional dedicated training, such as the 1.2 million workers that could shift from fossil fuel heating to heat pumps and the 4 million workers who could shift from internal combustion engine (ICE) manufacturing to EVs between now and 2030 in the Net Zero Emissions by 2050 Scenario (NZE scenario). Much of this training can be done on the job and within firms making the transition. For other workers, slightly more retraining would be required, such as is the case for oil and gas workers with skills relevant to the offshore wind, hydrogen and CCUS sectors.
- This transition risk is particularly acute for coal miners in emerging and developing countries. The coal supply workforce shrank by 225 000 jobs between 2019 and 2022, and under current policies is expected to further contract by 1.4 million jobs by 2030 — however most losses in coal mining are related to improvements in labour productivity and other efficiencies. Coal employment declines would be higher in the NZE Scenario pathway. Many coal producing regions have already successfully managed coal transitions over the past century, generating important policy lessons for other regions. Targeted reskilling and community support policies for declining coal regions can help transfer these workers to other sectors, like critical minerals. Our analysis finds that over 180 000 jobs were added in critical mineral mining in the last three years, and 40% of current coal miners work within 200 km of a critical mineral deposit.
- Oil and gas workers face less immediate transitions risks, but the long-term decline of fossil fuels demand is already shaping labour trends in the industry. Around 150 000 fewer people work in oil supply than in 2019, where companies have been wary of rehiring given changing trends. Conversely, jobs in natural gas increased by 350 000 thanks to strong growth in LNG, making natural gas the only fossil fuel to have surpassed pre-pandemic employment levels by 2022. Future labour needs in oil and gas vary widely depending on the pace of the transition. Under current policies, the oil and gas workforce grows by nearly 300 000 workers by 2030 —but in the NZE Scenario employment falls by over 2.5 million. Some oil and natural gas companies are diversifying their portfolios into other energy sectors, which could guard against skill retention risks in the face of this uncertainty. In the NZE Scenario, job growth in hydrogen, CCUS, geothermal and biofuel and biogas processing nearly offsets decreases in core oil and gas business to 2030.
- Higher wages in the energy sector have helped attract workers from other industries, but wage disparities between energy segments could impede the transfer of needed skills. Compensation in the energy sector is typically higher than for similar occupations in the broader economy, mostly reflecting higher skilling requirements. For example, solar PV installers can earn around 15% more than general roofers and 40% more than telecommunication installers, occupations requiring comparable skills. Still, wages vary greatly across the energy sector, reflecting differences in skill level and the sectors’ ability to offer high compensation. Wage differentials could create headwinds for worker transfers within the energy sector and could contribute to some workers switching out of the energy sector entirely. Today, workers in nuclear, oil and gas benefit from some of the highest wages in the entire economy. Some clean energy technologies offer comparable wages, as is the case in biofuel processing, while others like wind, solar and hydrogen see the average worker earning 15-30% less today.
Source: World Energy Employment 2023