By FREE Staff
With the passage of the Inflation Reduction Act, the United States entered a new age in its clean energy transition. The law, passed last August 2022, is the single largest federal investment in a clean energy economy in the country’s history.
The IRA not only created financial incentives, loans and programs to spur domestic investment in clean energy manufacturing, it also set the stage for a broader push to shape the U.S. economy around clean energy.
With its $467 billion in federal investment through 2031, the U.S. is creating long-term changes
in its employment landscape and the jobs that will facilitate the energy transition. Researchers with the Foundation for Renewable Energy & Environment explored this shift in the country’s labor market to one more heavily involved in clean energy in a report released in June 2023 — “Strategies to Broaden Employment Opportunities in the Green Energy Economy: Estimated Job and Public Health Impacts of the Inflation Reduction Act and Bipartisan Infrastructure Law.” Authored by FREE co-founder and President Dr. John Byrne, FREE Research Director Dr. Job Taminiau and the University of Delaware’s Dharni Grover and Saeed Esfandi, the report focuses on how the U.S. can create new employment sectors as a result of the passage of the IRA.
The U.S.’s clean energy labor market is set to explode in the coming years, driven in part by the
IRA and the investment it is spurring. For example, approximately 333,887 people currently
work in the country’s solar energy market, a number that is expected to double in less than a
decade, according to the FREE report.
Other clean energy sectors are forecasted to enjoy similar growth. The electric vehicle battery
manufacturing sector is seeing explosive growth as companies invest billions of dollars in
domestic production sites, creating hundreds of thousands of jobs. Jobs in the EV battery and battery charging manufacturing sector are expected to increase by 17% between 2021 and 2031, according to the U.S. Bureau of Labor Statistics.
Across sectors, analysts estimate that the IRA could help create 900,000 jobs a year over the
next decade, totaling over nine million jobs, Byrne, Taminiau, Grover and Esfandi write in their
report. The researchers also found that the law could create up to 4.7 million extra jobs. Expanding job opportunities in the IRA era In order to examine the impact the IRA could have on the U.S. labor market, FREE researchers used “job multipliers,” which represent the expected number of jobs that could be created per one million dollars invested in the energy sector.
Researchers found that job multipliers were highest for investments in energy efficiency and solar energy, and estimated that a one million dollar investment in green energy sectors is likely to yield seven to twelve jobs. Using the job multiplier method, researchers also found that jobs created in the energy sector tend to be above average pay, yet another example of the positive labor contributions the IRA is
spurring in the U.S. Such improved wages are also likely to contribute to higher living standards
for those employed.
To reach those higher standards however, the U.S. will need to create institutional support and
opportunities for the many Americans who currently work in the fossil fuel sector and will need
new sources of employment. Byrne, Taminiau, Grover and Esfandi write in their report that as the clean energy sector expands, conventional energy sources like coal, oil, and natural gas will experience job losses.
For example, due in part to the energy transition, jobs in the coal mining sector have fallen from
approximately 90,000 jobs in 2012 to 38,000 jobs in 2022. Many of those losing jobs at the hands of the transition away from fossil fuels could be retrained and well-suited for employment in the clean energy sector. These positions could include direct jobs related to the core activities of a clean energy facility, jobs related to the supply chain and support of these facilities, and induced jobs generated from the economic activities of the direct and indirect employees, shareholders, and government agencies.
Both the federal and state-level governments in the U.S. will need to play an active role in helping U.S. workers take advantage of these job opportunities. This can be particularly accomplished through the use of mid-transition planning, which is strategic planning around how to ease economic and social tensions during a societal transition. Efforts can include things like the use of grants, the building of infrastructure, or the creation of job training programs.
Institutions will need to be innovative in how they approach not only job creation in their jurisdictions, but job training and clean energy knowledge, so that potential workers are not only available for these new positions, but are set up for success to take advantage of them. The energy transition underway in the U.S. presents an exciting moment for American workers, so as long as governments, private industry and the general population cooperate to leverage these opportunities.