The purpose of the transformation of the energy sector is to improve lives and livelihoods. Alongside the benefits of avoiding the worst of climate change, this means enabling citizens to seize the opportunities and navigate the disruptions caused by the shift to clean energy technologies. It means eradicating energy poverty: no system is sustainable if it continues to exclude large parts of the global population from access to modern energy.1 And it means putting considerations of employment, equity, inclusion, affordability, access and sustainable economic development at the centre of the process.

Employment in clean energy areas is set to become a very dynamic part of labour markets, with growth more than offsetting a decline in traditional fossil fuel supply sectors. As well as creating jobs in renewables and energy network industries, transitions increase employment in related sectors such as construction (retrofits and energy‐efficient buildings) and manufacturing (efficient appliances and EVs). In total, we estimate that an additional 13 million workers are employed in clean energy and related sectors by 2030 in the APS, and this figure doubles in the NZE.

The transition also comes with dislocation: new jobs are not necessarily created in the same places where jobs are lost. Skill sets are not automatically transferable, and new skills are needed. This is true both within specific countries and internationally. Governments need to manage the impacts in a co-ordinated way, seeking transition pathways that maximise opportunities for decent, high quality work and for workers to make use of existing skills, and mobilising long-term support for workers and communities where jobs are lost. 

Quantifying the employment effects of various transition pathways facilitates proper planning of support measures, including training and education programmes. Many countries have designed programmes that seek to use existing strengths in the oil and gas sector in emerging areas such as offshore wind, CCUS, geothermal and hydrogen: the United Kingdom’s North Sea Transition Deal is a case in point. Other countries, including South Africa, have instituted broad social dialogues on people-centred transitions, encompassing companies, trade unions, regional and local governments, civil society and the financial sector.

As transitions gain pace, there will be increased competition for clean energy supply chains and related jobs. Most clean energy jobs are created close to the location of a project, whether it is a wind farm or construction of energy-efficient housing. However, we estimate that a quarter of energy employment is tied to supply chains that may be located in other countries, particularly in the case of solar PV, wind, batteries, grid components and vehicle components. Some governments are looking to onshore these elements, or using economic recovery funding to make strategic investments in emerging segments such as CCUS, advanced battery technologies and low-carbon fuels. These industries, although nascent today, grow to employ nearly 1 million workers worldwide by 2030 in the APS. Favouring domestic manufacturing capacity could lead to more secure supply chains in some instances, as well as additional jobs. But, it could also drive up clean energy technology costs if it erects barriers to trade and reduces economies of scale.

Changes in the energy sector must support social and economic development and improve quality of life. A starting point is to bring modern energy to those that lack access. We estimate that providing universal access to electricity and clean cooking by 2030 would require investments of USD 43 billion per year, closing an important gap in the global energy system at a fraction of the overall cost of transitions. The affordability and security of energy supply are also vital considerations when it comes to quality of life.

The co-benefits of well-managed transitions include health and productivity gains. Over 90% of the world’s population breathe polluted air on a daily basis, which we estimate leads to over 5 million premature deaths a year. Air pollution also leads to multiple serious diseases, placing an extra burden on healthcare systems currently struggling to deal with the Covid-19 pandemic. While the STEPS and the APS see a rising number of premature deaths during the next decade, the NZE leads to dramatic reductions: by 2030 there are 1.9 million fewer premature deaths from household air pollution per year than in 2020, with over 95% of the reduction occurring in emerging market and developing economies.

The average person spends the vast majority of their time indoors, which means that the way transition policies affect buildings is an important element of well-being. In the NZE, immediate action is taken to ensure that, by the end of this decade, all new buildings meet zero-carbon-ready standards and around one-in-five existing buildings are retrofitted to those standards. Shifting to zero-carbon-ready buildings improves thermal comfort through major upgrades to building envelopes, e.g. improved insulation, glazing, weatherproofing and optimised ventilation. Remaining heating and cooling needs are met by the most efficient equipment such as heat pumps, often facilitated by automated controls. Managed well, these improvements can foster good physical and mental health by creating indoor living environments with healthy air temperatures, humidity levels, noise levels and improved air quality. Energy efficiency retrofit programmes for low-income housing deliver the greatest benefits, while highly energy-efficient workplaces and schools have also demonstrated positive impacts on productivity.

Good policy design takes into account issues of equity and inclusion as well. There are many ways to address these issues. For example, action can take the form of recycling revenues from carbon pricing schemes to relieve distributional impacts; introducing initiatives to bring young generations into the energy and climate policy debate as they have an essential stake in the consequences of the course that is set; and finding better ways to assess the gender impacts of policy choices and to advance the participation of women in the energy sector.

Far-reaching energy transitions require support and engagement across society. A number of changes depend on broad social acceptance. In the NZE, at least half of emissions reductions over the next decade require some kind of consumer buy-in, e.g. a decision to switch to an EV or a heat pump. Around 4% of emissions reductions require behavioural changes, e.g. cycling rather than driving to work. 

Societal support is about more than consumer buy-in and behavioural change, important though they are, and gaining broad public support for change involves some difficult trade-offs. For example, creating economic incentives for a shift towards heat pumps could make natural gas more expensive (and push up household heating bills in the interim). Similarly, introducing carbon prices to generate changes in energy consumption patterns could provoke a backlash from lower income and/or rural households, in the absence of effective ways to manage the distributional consequences. Acceptance of a changing energy sector is also critical for the siting and permitting of new infrastructure. Energy transitions do not mean an end to large infrastructure projects, successful transitions need them. Such projects do not only include technologies such as CCUS or nuclear, but also wind, solar and grid investments, all which can face opposition from local communities. Ways need to be found to engage those concerned and assuage their concerns. A clear and engaged social debate on the case for change is vital.