Prognos

23.04.20 The energy transition is going to be hard work” Interview with Dr. Almut Kirchner, Energy Expert • 6 min.

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Dr. Almut Kirchner

Is climate change good or bad for the economy? What qualifications are particularly in demand in a sustainable economy? We talked about the economic implications of the energy transition with Dr. Almut Kirchner of Prognos AG, an expert in energy security. 

How do you see your role in the climate debate?  

The discourse on climate change and the energy transition in Germany is highly ideological. My company, Prognos, deals with a wide variety of actors and issues. This experience teaches us that each side tends to ignore the viewpoints it doesn’t like. We try to be on the rational side of the debate. We know that there’s no way around the energy transition. But we also know that it’s wrong to portray the energy transition as a direct path to paradise. It’s going to be hard work. New actors will emerge, and old actors will face difficulties. Those that can’t overcome these difficulties may face extinction. The energy transition will create opportunities. But it will also pose challenges and risks. And it will lead to many negotiations. There’s no point in turning a blind eye to all this.

What do the various sides still refuse to see? 

Advocates, for example, rarely see that the energy transition will have losers. Climate-friendly policies would pose much bigger problems for some industries and would cause others—like coal and much of the petroleum industry—to disappear entirely. Obviously, such policies would also create many opportunities. But the opportunities and the challenges don’t affect the same industries or individuals.  

Can’t a well-orchestrated transition along with retraining programs ensure a smooth path to the future?

Sure. We have a great opportunity to prevent the transition from overwhelming us and instead to manage it by setting clear targets and timeframes. Nevertheless, the coal phaseout shows that in areas of Germany where lignite mining is the only show in town, retraining isn’t much help. Companies or organizations would have to relocate to these areas. And the people there would have to be willing to be more mobile, which isn’t easy. In addition, people who are being retrained need to complete their new qualification. That means learning something new for, say, two years. Yet during this time they may earn nothing or actually have to pay for their retraining. Such situations may require individually tailored solutions. Thankfully, there’s no shortage of labor-market mechanisms. 

Is the energy transition a blessing or a curse for the labor market?  

Germany is a highly developed industrial country with a lot of small and medium-sized enterprises. This positions us well to make the energy transition a success. Moreover, if we do it wisely, we can produce most of the new technologies ourselves. And being a technology exporter will enable us to make a significant contribution to climate protection in other countries. This will be good for Germany’s macroeconomy as well as its labor market. All studies on the economic impact of the energy transition show that, although substantial investments for modernization are ahead, a wealthy and efficient economy like Germany’s will be able to shoulder them with relative ease. Moreover, the burden of these investments will be offset by substantial savings from a reduction in the import of pricey fossil fuels. If Germany sets the right course and adopts the right policies, the energy transition will have a positive impact on value creation and employment. But there will still be winners and losers. The good news is that there will probably be slightly more winners than losers. 

From what you know, who are the winners and losers likely to be? Will jobs that demand few qualifications be the ones to disappear?  

Our research doesn’t indicate that. We actually see that the energy transition will offer new opportunities in all job categories, even unskilled workers. The bigger picture is that the economy is trending toward more qualified employment. The energy transition isn’t going to alter this. With it or without it, the situation regarding job qualifications will be the same. Of course, the losers will tend to be workers in fossil-fuel industries like coal mining, coal-fired power generation, and oil refining. Some segments of the automotive industry will lose out as well: parts suppliers and especially repair shops. The winners, on the other hand, are spread across almost all sectors of the economy. The situation is particularly positive in construction, where big investments in energy efficiency are being made. The energy transition is also good news for renewable new-build projects and numerous energy-efficiency technologies. These areas offer a very diverse range of jobs and qualification requirements. 

If it’s not a matter of qualifications, perhaps there’s gap between urban and rural areas? 

Obviously, switching jobs is always easier in an area that already has many jobs and a diverse economy. Conversely, it’s harder in rural areas. That said, an industry like construction is active nationwide.  

What can I do as an individual to position myself well for the energy transition?  

Every industry will need to modernize, but obtaining training on how renewables and energy efficiency will affect your particular industry could definitely help your career prospects and job security. Digitization is another important issue, because new energy systems will be digitally controlled. And to state the obvious: in an increasingly international economy, being able to speak several languages is always an advantage. 

How optimistic are you about the future of Germany’s energy transition?  

A big task lies ahead of us. Yet it only accounts for about 3 percent of GDP. This applies to upcoming investments as well. As I said, an efficient economy can handle this. Of course, there will still be challenges. The shortage of skilled workers, for example, is a problem, especially in construction. Moreover, too little action has been taken in the past 30 years to address climate change. So we face a twofold challenge. We need to tackle climate change but also take steps to cope with the risks and damage already caused and still being caused by rapid global warming. Nevertheless, I remain very optimistic. Because I see that young people in particular have understood that the issue concerns them personally. My work brings me into contact with many young, committed people who are already asking themselves during their education and training what they can do to make a meaningful contribution. So I believe that generational change alone will lead to developments that today we can’t begin to imagine.  


Bio

Dr. Almut Kirchner, a physicist, has led the energy and climate policy team at Basel-based Prognos AG for 17 years. Prognos, which has offices in Switzerland, Germany, and Belgium, has more than 60 years of experience helping private companies, associations, foundations, and public sector clients develop viable strategies for the future. Kirchner conducts research in supply security, economic efficiency, the environmental impact of energy production and consumption, technology, the integration of energy and climate policy into long-term strategies, and distribution and security issues. Together with a wide range of partners—from government ministries to the World Economic Forum—she and her team research the impact of energy policies and provide forecasts for numerous environmental issues. 

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