How can the shift to net zero create good jobs?

The transition to net-zero emissions of carbon dioxide to stop climate change could be difficult for people working in high carbon-emitting sectors. But net zero is set to boost employment numbers across the energy sector – and the new jobs are likely to be high-skills ones that pay well.

This article is part of an upcoming collection on good jobs by the Policy Hub for the Huth Initiative for a New Political Economy.

Climate change will continue to get worse until we reach a ‘net-zero’ balance between carbon emitted into the atmosphere and carbon removed from it through measures like tree planting or direct air capture. This is why 77% of global GDP is now subject to a net-zero target (much of the rest is in the United States).

Reaching net zero is no longer as costly as we once thought. The behavioural adjustments and technological solutions – such as renewable energy, electric vehicles and heat pumps – are known and getting cheaper. But the implications for the global economy, including people’s jobs, remain profound.

High carbon-emitting sectors, such as oil and gas, will see a steep contraction in job numbers. Others – such as transport, construction, manufacturing and heavy industry – will see substantial changes in occupational tasks and skills requirements as firms adapt their products and production processes. Structural change of this magnitude will come at a significant cost of adjustment.

Will there be fewer jobs or more jobs?

The zero-carbon economy is already sizeable and growing fast. In 2022, there were 35 million clean energy jobs worldwide – about three million more than in the fossil fuel industry. Almost half of them (16.2 million) were in renewable energy, chiefly in China, but also in Brazil, the European Union (EU), India and the United States, which had between one and two million renewable energy jobs each.

This trend is set to continue. By 2050, there could be 43 million jobs in renewable energy around the world, outweighing any job losses elsewhere in the energy system.

Job growth will be fastest in the early phases of the net-zero transition, when the scaling up of renewables creates construction jobs to install new power generation equipment and adapt energy transmission systems. Over the longer term, when the focus shifts to maintenance and replacement, labour demand could level off.

The reason for the growth in energy jobs is the way in which the transition to net zero is likely to unfold. Analysts agree that the decarbonisation of the global economy starts in the electricity sector, where zero-carbon solutions like solar and wind are widely available and increasingly cheap.

Clean electricity can then be used to decarbonise other sectors, such as surface transport (through electric vehicles), buildings (through heat pumps) and parts of industry (with green hydrogen). This creates growing demand for electrical engineering skills, but also interdisciplinary skills that combine engineering with environmental and project management.

It would be a mistake to think of net-zero jobs as an entirely distinct employment category. The zero-carbon economy will feature a continuum of occupations with varying degrees of net-zero-specific skills.

In addition to explicit net-zero jobs (such as carbon traders), there will be conventional occupations within zero-carbon firms (for example, in the human resources department of battery manufacturers), jobs in the supply chain (such as lorry drivers transporting solar panels) and ‘induced’ jobs (for example, in the bars or cafes where zero-carbon workers spend their time off). It has been estimated that around 20% of the workforce in industrialised countries is already part of the net-zero economy according to this broader definition.

How well do net-zero jobs pay?

There is some evidence that clean energy jobs attract higher wages than the market average. An analysis of South African job adverts finds that clean jobs pay an extra $215 per month on average – a 16% difference compared with all other jobs. Other studies find ‘green premiums’ of 6-21% in Japan, Norway and the United States, although differences in definitions make the numbers hard to compare from country to country.

The reasons for this green premium are not yet fully understood. Skills requirements certainly matter. Energy sector employees, both clean and conventional, tend to be highly skilled – 36% of energy jobs fall within high-skilled occupations, compared with 27% in the broader economy. Net-zero jobs have particularly high skills demands, both across roles and within the same occupation.

Adverts for net-zero jobs typically require 14 skills, compared with the nine required skills for high-carbon jobs and generic adverts. This is because designing, developing and operating entirely new systems requires strong technical capabilities and problem-solving skills.

Other factors also play a role, including employer characteristics (such as firm size), the level of unionisation, working conditions and risk profiles. Fossil fuel workers, where these characteristics are arguably more pronounced, enjoy an even higher wage premium than clean energy workers. Once all these factors are taken into account, the wage premium all but disappears. So, neither clean nor conventional energy jobs are intrinsically better paid.

How can we close the skills gap?

The high skill requirements of net-zero jobs may be good for wages, but they are also a challenge. Around the world, the workforce will have to be upskilled and reskilled, with training, education and transition programmes for workers across occupations and career stages. In expanding occupations like electrical engineering, existing training programmes will have to be scaled up to meet growing demand.

There are few estimates of just how wide-ranging reskilling will be. In the UK, about 10% of the workforce might be affected, with significantly higher shares in construction (30%), transport (26%) and manufacturing (17%).

Much of the upskilling needs are low-intensity and can be met though short courses or on the job. For example, heating engineers will have to become familiar with heat pumps and car mechanics with electric vehicles. Particularly in flexible labour markets, high-skilled workers should have the versatility to make the transition into adjacent jobs relatively smoothly.

For less adaptable workers and communities that rely heavily on high-carbon industries, the transition will be more difficult. There may also be discrepancies between regions where jobs are lost and regions where new ones are created. A study of Brazil finds that the mismatch between workers and jobs in the worst affected regions could raise unemployment rates by several percentage points.

We lack good examples of successful community transitions to deal with this challenge. An often-cited example is the transition away from coal in Germany’s Ruhr valley.

The experience from the Ruhr valley and elsewhere highlights the importance of close collaboration between government, industry, labour unions and local communities. Social protection measures (such as early retirement packages and temporary wage support) have an important role to play, with the Ruhr case study highlighting the need for pro-active labour market interventions such as reskilling programmes, vocational training and job search assistance.

We are beginning to understand the impact of net zero on labour markets. Net zero is both a risk and an opportunity for workers. Lifelong learning, vocational education and place-based support for affected regions will be essential for a just transition and to build a workforce capable of delivering global net-zero goals.

Where can I find out more?

Pathways to a productive and inclusive net zero: A 2026 report from the Centre for Economic Performance at the London School of Economics (LSE).
Towards a just and equitable low-carbon energy transition: A 2018 briefing paper from Imperial College London.
World Energy Employment 2023: A report from the International Energy Agency.
Are ‘green’ jobs good jobs? How lessons from the experience to date can inform labour market transitions of the future: A 2021 LSE policy paper by Anna Valero and Sabrina Mueller.