Green Energy for the Arab Spring – Employment from renewable energy and energy efficiency in Tunisia Contribution to the special session: “Renewable energy policies – modeling challenges and economic results”

Strategies to increase the contribution of renewable energy to the energy system and to enhance energy efficiency of industries and households are on the agenda of many countries. The motifs are manifold: using the domestic potential for energy generation and thus increasing energy security or lowering energy consumption with efficiency measures will decrease import dependence and decentralized electricity generation can improve access to electricity for remote and rural areas. On a larger scale, clean energy generation and energy efficiency contribute to climate change mitigation and resource protection and therefore to the well-being of all countries. Additionally, there is increasing evidence that the support of new technologies will accelerate industrial development and support economic growth and competitiveness. The literature shows that, given the respective policy support and a target oriented policy instrument mix, renewable energy and efficiency increases exhibit positive effects on the labor market, on qualification and innovation. Thus far, in depth analyses on these effects has predominantly been provided for industrialized countries. For developing countries or emerging economies, the discussion on overall economic effects or more specifically, employment effects of renewable energy and efficiency is only at its beginning. The research and action program, the International Agency for Renewable Energy (IRENA) for 2012 will have a focus on these issues. IRENA launched a side event to the Durban Conference 2011 under the headline “Exploring opportunities for local manufacturing as a means to reduce capital costs, create local employment opportunities, and improve trade balances” (IRENA in Durban, 2011, Prospects for the African Power Sector, Scenarios and Strategies for Africa Project). Modeling these effects for developing countries creates new challenges in terms of data availability, suitability of models and the choice of the overall approach. This paper suggests a model for the Tunisian case and presents results. The approach chosen should rely on the country specific data available, because the employment impacts hinge on the productions structure of the respective country, the capacity level and the skills of the workforce as well as the natural resources for renewable energy. Here, we will apply an adjusted Input-Output approach embedded in a small model of Tunisia. Our approach is a combination of technology-specific Input-Output tables, labor-intensities of the respective production, country-specific Input-Output Tables and country specific statistical data. From the technology specific tables, we derive information about the cost structure of 5 different renewable energy (RE) technologies and on the increase in energy efficiency of buildings and in the main industry sectors. Depending on the shares of imported goods and services and the domestic production we can obtain domestic employment by combining these tables with the domestic input-output structure. To combine as much knowledge as possible we suggest a two-stage procedure. The demand for renewable energy installations in Tunisia is modeled according to the Tunisian Solar Plan until 2016. For the development beyond 2016 we use scenarios developed in a German-Tunisian cooperation with the Wuppertal Institute. Other developments can be implemented in the tool, because it has a user friendly interface to handle different scenarios. The most important scenario parameters are investment in renewable energy and efficiency as well as the share of domestic production for domestic and international installation. Domestic production creates domestic demand for further inputs, following the domestic production structure given in the Tunisian input-output tables, while imports will also create jobs and value added in the producer countries. . If Tunisia releases local content requirements for international investors, as China did, or includes these in e.g. a tendering procedure for wind installations as Portugal did, the import quota will be less than currently assumed. With no additional support, the Tunisian Solar Plan will lead to almost 7,000 additional jobs in Tunisia. If the imports are lowered to only 10% on average (Scenario S2: ER++), employment can rise to more than 20,000 people or more than 0.6 percent of overall employment. This can be considered as the maximum attainable employment from the given investment path. Again, towards the end of the simulation horizon, productivity gains and RE cost decreases will be leading to less employment from the same investment impacts. The Tunisian Solar Plan gives an estimate for domestic integration of production for the wind industry. If we simulate employment effects using the suggested 43% of integration starting in 2012, the results shift from the original 7,000 jobs to a new total of close to 9,000 jobs. This shows the possible benefits of a successful integration strategy.