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Crisis breeds innovation: How the 2022 energy crisis accelerated green technology adoption

Achieving global net zero emissions requires rapid deployment of low-carbon technologies. Using online job postings from 35 countries, this column measures the diffusion of low-carbon technology-related skills from 2014 to 2022 and investigates the role of the 2022 global energy crisis in driving labour demand. The data show a significant rise in job postings in 2022, particularly in Europe. Energy-intensive firms and those in countries more reliant on natural gas imports saw a faster increase in low-carbon technology-related hiring. These findings indicate the potential of energy price shocks and carbon pricing to accelerate adoption of these technologies.

Achieving net zero emissions globally will require a rapid deployment of low-carbon technologies (LCTs), and this in turn can boost economic activity (Hasna et al. 2024). Despite its central importance, evidence on the diffusion of various LCTs across countries, regions, industries, and firms has been limited. Most research has focused instead on the invention or innovation in LCTs, often using patent data (Popp 2002, Aghion et al. 2016, Dechezleprêtre et al. 2013, Popp 2019). Meanwhile, papers on LCT diffusion have typically studied the adoption of a specific LCT in a specific industry or country (Knittel 2011, Costantini et al. 2017). This partly reflects the lack of detailed data on the deployment of these technologies.

In a recent paper (Bastos et al. 2024), we address this gap by constructing proxies for the diffusion of a wide range of LCTs across different regions, countries, industries, and occupations over time, from 2014 to 2022. We follow a growing literature that infers the spread of new technologies through their presence in the demand for new tasks or skills in online job postings (e.g. Bloom et al. 2023, Acemoglu et al. 2022, Goldfarb et al. 2023).

Using a high-frequency dataset of online job postings from 35 countries, we measure the posting of vacancies mentioning technologies from the European Patent Office’s (EPO) Y02 classification of ‘climate change mitigation technologies’. This captures jobs related to the research, manufacturing, and deployment of these technologies — for example, positions in a university lab developing solar cell technology, jobs in an electric vehicles factory, and roles for electricians installing heat pumps.

Our findings indicate a significant increase in diffusion of LCTs in 2022, particularly in the second half of the year. Analysing data from 16 countries with available job postings information since 2014, we observe a modest growth in LCT-related hiring until 2018, which then accelerated rapidly in 2022 (see Figure 1). The share of all online job postings mentioning LCTs more than doubled between 2019 and 2022, increasing from under 1% at the end of 2021 to 1.7% by the end of 2022. For an expanded dataset of 35 countries, a similar pattern of modest growth from 2019 to 2021 and rapid growth in 2022 was evidenced.

Figure 1 Share of online job postings mentioning low-carbon technologies in 16 advanced economies

Figure 1 Share of online job postings mentioning low-carbon technologies in 16 advanced economies
Figure 1 Share of online job postings mentioning low-carbon technologies in 16 advanced economies

The rapid growth in LCT-related vacancies occurred in three quarters of the countries studied, with Europe showing the strongest increase. Four groups of LCTs saw particularly large increases from 2021 to 2022: those related to renewable energy, new energy vehicles, improved thermal performance, and electrical generation and storage (Figure 2). Growth was notable in 19 of the 20 ISIC one-digit industries, especially in manufacturing, electricity and heat supply, and construction. Jobs related to deployment saw faster growth than those related to production or research.

Figure 2 Job postings by technology type in 16 advanced economies

Figure 2 Job postings by technology type in 16 advanced economies
Figure 2 Job postings by technology type in 16 advanced economies

In the paper, we investigate the role of the 2022 global energy crisis, particularly the Russian invasion of Ukraine, in driving this surge in LCT-related labour demand. The invasion led to a substantial and unexpected increase in energy prices (Alessandri and Gazzani 2023 and Gil Tertre et al. 2023). The price of natural gas in Europe doubled between January and August 2022, with the impact spreading to all fossil fuel and electricity prices in energy importing countries worldwide. By August 2022, wholesale electricity prices in half of the European countries were over 12 times higher than their January 2018 levels. However, the impact was felt unevenly across countries, industries, firms, and consumers. In the US, for example, the benchmark Henry Hub natural gas price remained largely unchanged throughout the crisis. Meanwhile, inflation differentials in the euro area widened to historically high levels (Coutinho and Licchetta 2024)

We find that countries’ import reliance and energy mix, and firms’ ex-ante energy intensity mattered significantly. Specifically, firms most exposed to the rise in energy prices, due to their location in countries more dependent on natural gas imports prior to the invasion, saw a faster increase in LCT-related job postings after the invasion. Within these countries, more energy intensive firms experienced a more rapid increase in LCT-related job postings compared to less energy intensive ones, a finding in line with assumptions by Mejean et al. (2022). Using an event study design, we show that this differential increase began in March 2022, peaking in December 2022. There is no correlation between baseline dependence on natural gas imports and GDP per capita, R&D intensity, or other country-level characteristics linked to low-carbon innovation or technology deployment. Additionally, there is no evidence of pre-trends in LCT postings for more exposed firms.

These findings suggest that higher energy prices due to the invasion spurred firms to hire more workers that can help them adopt or develop LCTs. The stronger reaction of more energy intensive firms implies an attempt to lower energy costs through improved energy efficiency or lower dependence on fossil fuels. While energy security concerns could also drive this response, it is likely that governments would be more concerned with energy security than firms. Thus, our results offer preliminary evidence on the role of energy price shocks, and by extension carbon price shocks, in promoting low-carbon innovation and adoption.

Source : VOXeu



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