Work Package 4 of REPower-CEST produces information on the economic impacts of the clean energy transition and on the factors to be considered for the identified economic potential to be realised. The matter is examined through four research questions:
- What are the short and long term economic and employment impacts of the clean energy transition in Finland and its regions?
- What kinds of labor market issues, such as sufficiency, skills mismatches, and regional allocation problems, restrict the realization of the clean energy transition, and how can they be resolved?
- What is the current state of energy poverty in the housing and transportation of households, and how will the clean energy transition affect future development?
- What economic, environmental and social factors should be considered regarding the choices related to the clean energy transition and how do they relate to each other?
Economic and employment impacts of the clean energy transition in the Finnish economy and regional economies
clean energy transition is expected to become the new driver of sustainable economic growth for the Finnish economy. transition requires significant investments, both in the energy industry and in activities that utilize affordable and clean energy. The energy transition is expected to generate new economic activity, employment, added value and tax revenues, both nationally and regionally.
The clean energy transition is progressing all over Finland. The investments and production activities required in the transition are of various nature, which creates opportunities for regions with different geographies, natural resources and economic structures. Investments utilising regional strengths can also contribute to regions negatively affected by urbanisation, by improving employment and strengthening local economies, thus reducing unemployment and promoting balanced regional development. Regional analyses enable the planning of more targeted and effective policies and support measures.
Clean energy investments generate added value through new production facilities, infrastructure and services, which indirectly increases economic activity also in several other sectors outside the energy sector.
This economic activity extends to, for example, the construction and manufacturing industries, as well as research and development activities. Therefore, clean energy investments can generate widely positive indirect economic effects across society. Economic activity, in turn, supports public service and infrastructure investments through tax revenues, further supporting sustainable economic growth.
The task provides information on the national and regional economic impacts of the clean energy transition (production, added value, employment, taxes) on a technology-specific basis, as well as in various scenarios.
Workforce needed in the clean energy transition
The availability of skilled labour is a critical factor in the success of the clean energy transition and the realisation of economic potential. The clean energy sector needs a wide range of skills of various levels, including operational and development work.
A well-functioning labour market for the acquisition of skilled labour is an essential competitive factor in the international market. Education systems must adapt to the labour needs identified in the clean energy transition, so that the availability of labour does not limit the transition.
The public sector plays a significant role in securing the availability of labour, as it is responsible for providing the necessary resources and infrastructure, as well as for supporting education and research that are essential for the clean energy transition.
The task involves analysing the labour market in relation to modelled economic potentials. The work utilises personal register data and statistical modelling methods.
Energy poverty in the clean energy transition
Different population groups are in different positions in terms of their energy consumption. The energy transition may even increase energy poverty among the most economically disadvantaged groups, such as low-income families and pensioners. Any increase in energy costs may exacerbate their situation, as energy costs may already consume a large share of their income. Therefore, when planning the energy transition, it is important to consider the alleviation of energy poverty, for example by providing subsidies and incentives for energy efficiency investments, especially for the most economically disadvantaged households. Positive economic development also contributes to supporting the most economically disadvantaged groups and balances the costs of the transition in a socially just way.
The task produces information on the household-specific costs related to the energy consumption of housing and transport, as well as on their share of the household's disposable income. The work utilises unit-level energy consumption models, data on transportation options, and personal registry data.
Valuation of the clean energy transition
The clean energy transition can be implemented through various technology and steering instrument entities, the economic, social and environmental impacts of which vary depending on the characteristics of the chosen methods.
The difficulty in choosing alternatives is related to how to measure the impacts of factors not directly quantifiable in monetary terms, such as environmental and energy security impacts. Through choice experiment studies, this task aims to enhance decision-makers' understanding of what people value in the clean energy transition and how different factors relate to each other. A comprehensive assessment ensures that the clean energy transition is economically, socially and environmentally sustainable, benefiting the whole society.
The focus of the valuation study will be specified during the project, based on the consortium-level selection. The study will be conducted using the choice experiment method.
The Finnish Environment Institute is responsible for the content of this page, as part of the REPower-CEST project.