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Day Month Year Estimating the potential impact of a greening economy on job creation Jorge Maia Head: Research & Information Industrial Development Corporation Green Economy Summit Sandton, 19 May 2010 Introduction to the IDC/DBSA research project • High expectations around green jobs: – Rapid growth sector with enormous multi-sectoral potential. – Determinant of future competitiveness. – Economic crisis imperative – one of the main solutions. Need for greater clarity around job creating potential. • Existing figures on green jobs: – High variability from one study to another - mainly sector- or technology-specific, no macro-economic estimates. – Often weak reliability / uncertainty about the sources. Uncertainty = criticism = credibility issues. • Inform optimal technology mix to meet energy demand, highlighting relative jobs potential: – Not “green jobs” in isolation, but strong employment emphasis/balance when greening the economy. – Policy trade-offs (long-term economic growth, emissions reduction, job creation, sustained competitiveness). – Acknowledge and face the various constraints. – Prioritise sectoral emphasis, sequencing policies over time. Maximise job creation as we green the SA economy. 2 Introduction to the IDC/DBSA research project (cont.) Moving away from an overwhelming dependency on fossil fuels (especially coal) for energy generation in SA, towards alternative energy sources: + ve impact - ve impact • Mining • Transport (logistics) • Environmental impact such as pollution levels (air, water, soil etc.) • Economic linkages (GDP, jobs, investment, etc.) • Impact on output levels, investment & jobs in coal mining (expansion at slower pace, substitution in the L-T) • (New investment, jobs and output through alternative energy sectors, incl. const., manufacturing, O&M.) • Transportation services activity (rail & road) from coal mines to power stations • Transportation of cleantech materials • Transport of export coal to ports. • Road usage: reduced congestion & infrastructural damage. • Improvement in soil and land quality • Improved water and air quality • Increased water availability • Reduced economic activity in several sectors (e.g. machinery & equipment, chemicals etc.), via linkages, due to lower coal mining production over time • Regional shifts i.t.o. investment, GDP, jobs • Increased economic activity due to linkages arising from expanding renewable energy sector & introduction of cleaner technologies . • Potential growth of export sector associated with renewables & cleantech. Estimating the economy-wide impact Assessing the impact of introducing alternative/renewable energy sources & cleantech Adoption of “greener” technologies Demand for investment related goods and/or materials during construction phase New investment required Cleaner energy generation/ technology application and operational phase Increased construction activity, as well as higher production activity in existing/new domestic supplying sectors (GDP, jobs, investment, etc.) Adverse BoP implications due to increased import demand for specialised goods not available in SA, particularly in the S-T, gradually +ve Increased economic activity associated with cleaner energy generation / technology application, with direct impact on job creation Increased economic activity in associated industries through linkages / multiplier effects (e.g. business services, components manufacture) Export potential Export potential 4 Process of determining employment potential Technological application/resource management (energy generation, energy efficiency, emission control, biodiversity) Construction Local potential Short-term jobs opportunities Export potential Manufacturing Local potential Export potential Medium-term jobs opportunities Operation & maintenance Local potential Export potential Long-term jobs opportunities Case study – wind power generation: Growth and challenges Cumulative global wind power generation capacity • Growth in global wind power generation capacity has been almost exponential. 400 Gigawatt 300 • Technically, wind power has the largest RE generation potential after solar. Cumulative capacity Forecast GWEC scenario 200 • Some slowdown since late 2008 (with a few exceptions such as China). • Significant contribution in more than 70 countries, both industrialised and emerging/ developing. • Major challenges include: 100 0 – Not yet competitive, although continuously improving; – Depend on available wind power, backup capacity needed; – Logistics for construction; Source: Global Wind Energy Council – Grid connection. 6 Case study – wind power generation: Potential and challenges SA’s wind power potential: • Recorded potential is only moderate at best, though data is insufficient ; Average speed m/s 5.6 – 8.0 4.6 – 5.6 3.6 – 4.6 0 – 3.6 • Potential contribution to power generation in SA may be significantly higher – improved wind atlas being developed; • Potential (average speed) directly affects unit cost; • Some areas in east and north Africa seem to have higher wind power potential than South Africa. Major challenges facing the domestic wind power industry: • Transmission infrastructure / grid connection; • Regulatory framework, progress, support ; • Wind energy expected to be competitive by 2020. 7 Case study – wind power generation: Opportunities and strengths General opportunities & strengths include: • Promising REFIT tariff, ‘free’ power source, little water needed. • Tested technologies, improving competitiveness. • Commissioning – short period, generating units separately completed. • Strong investor interest – many proposed projects in pipeline, involving both global & local players. • Existing manufacturing capacity, demand-driven expansion potential. • New components manufacturing potential. • African markets. • Support from global institutions (UNDP, GEF, IFC). 8 Case study – wind power generation: Potential involvement of local industries Local industries: Potential capacity to contribute Industry Product Capacity Construction & civil engineering Foundation laying, tower erection, housing Sufficient Manufacturing: • Steel & metal products • Glass fibre & composites • Electrical equipment • Machinery Towers, frames, hubs, brakes, other parts Rotor blades, nacelle housing Generators, transformers, cables, other parts Shafts, bearings, gears Very good Good Good Limited Electricity distribution Grid connection Good Electricity generation Operation & maintenance Good Logistics Transporting mega-parts on rough terrain Challenging • Local manufacturing capacity (see next slide) can be promoted through engagement with established global manufacturers. • Significant opportunity exists in construction and manufacturing activities targeting other African markets with higher/good wind power potential. 9 Case study – wind power generation: Manufacturing wind turbines Composition of typical 5 MW wind turbine in terms of cost share Part Purpose Tower Rotor blades Gearbox Power converter Transformer Generator Main frame Pitch system Main shaft Rotor hub Nacelle housing Brake system Yaw system Rotor bearings Screws Cables All parts Provide height Wind force surface Increase rotational speed Convert to alternate current Increase voltage to grid's Converts energy to electricity Supports entire turbine train Adjusts blade angles Transfer rotational force Holds blades Covers whole drive train Bring turbine to a halt Rotates nacelle to face wind Carry axes Holds components in place Link turbine to sub station Source: EWEA % share 29.4 24.9 14.5 5.6 4.0 3.9 3.1 3.0 2.1 1.5 1.5 1.5 1.4 1.4 1.2 1.1 100.0 Material usage Sections of rolled steel, lattice structure or concrete Moulded glass fibre/carbon & epoxy/pol. composites Special steel Various metals and other materials (electronics) Various metals and other materials (electronics) Various metals and other materials (electronics) Steel Various Special steel Cast iron Glass fibre Steel and composites Steel Special steel Metal Copper and plastics 10 Case study – wind power generation: Estimating the job creation potential in SA Job creation potential: A range of research results Country / area Number of jobs per MW Note Global 3.3 Aggregate 400 000 jobs in a 120 GW industry USA 3.4 Aggregate 85 000 jobs in a 25 GW industry European wind industry 2.5 Aggregate 160 000 jobs in a 64 GW industry Europe (WWF) 0.4 Only operations & maintenance Literature averages (AGAMA) • Manufacturing • Installation • O&M • Other 4.8 3.2 0.5 1.0 0.1 Derived from a range of sources South Africa: DME / UNDP / GEF DME 3.1* 3.6 - 7.4* SA Wind Energy Programme, 2003 Capacity Building in Renewable Energy, 2004 * Jobs per GWh including indirect jobs 11 Case study – wind power generation: Estimating the job creation potential in SA Number of jobs Results: 5,000 4,000 3,000 2,000 1,000 0 Conservative scenario Optimistic scenario Other African projects Short-term 1 x 100MW 3 x 100MW 0 Medium-term 4 x 150MW 5 x 200MW 3 x 150MW Medium-term job creation Long-term 7 x 200MW 9 x 300MW 5 x 150MW Domestic Africa Aggregate 2 100MW 4 000MW 1 200MW Con Man O& M Number of jobs Conservative O& M Con Number of jobs Con Man Optimistic Man O& M Conservative 5,000 4,000 3,000 2,000 1,000 0 Domestic Domestic Africa O& M 5,000 4,000 3,000 2,000 1,000 0 New capacity created in terms of wind farms Short-term job creation Con Man • Manufacturing numbers based on: Optimistic – Share of parts in turbine cost (see composition of parts table); – Competitiveness of their domestic industries (high, medium, low); – Increasing penetration of local manufacturing (40%, 60%, 80%). Long-term job creation Domestic Africa O& M Con Conservative Man O& M • Jobs estimates using employment intensity/MW of 3.2, 1.0 & 0.7 for manufacturing, construction and O&M, respectively. Con Optimistic Man • South Africa’s future capacity ceiling will determine – Depends on IRP, expectations being only 2 000MW – 2 500MW 12 Case study – wind power generation: Potential jobs estimates Number of jobs (conservative scenario) Short-term Medium-term Long-term O&M 70 490 1 470 Construction 120 890 1 890 Manufacturing 92 1 081 3 626 Totals 282 2 461 6 986 Number of jobs (optimistic scenario) Short-term Medium-term Long-term O&M 210 910 3 010 Construction 360 1 310 3 410 Manufacturing 277 1 635 6 027 Totals 847 3 855 12 447 Concluding remarks • Substantial, yet preliminary, estimation work undertaken on : – Energy generation: solar PV; solar CSP; wind; hydro (small & large); wave and tidal; landfills; pyrolysis; biomass combustion; biofuels; and nuclear. – Energy efficiency: solar water heaters; light bulbs; insulation; cleaner stoves. • Estimation work yet to be undertaken on: – Emissions control. – Biodiversity. Need for substantial testing with key role players. Day Month Year Thank You The Industrial Development Corporation 19 Fredman Drive, Sandown PO Box 784055, Sandton, 2146 South Africa Telephone (011) 269 3000 Facsimile (011) 269 2116 E-mail [email protected]