A new report on jobs in the Scottish renewables sector highlights who is getting rich from our green transition and who is being left behind
I’ve been policy-nerding out over a new report from the Fraser of Allander Institute on the economic impact of the renewables sector in Scotland. You can read the report here.
The main focus of my reading has been the number of jobs that Scottish renewables are responsible for. This is often the main focus for politicians too who love to tell us that a new investment will create X thousands of jobs. It’s a particularly sharp political point in Scotland too where the promise of many tens of thousands of jobs in certain sectors of renewable energy have not materialised as promised and where Scotland has an extremely acute problem of what to do with jobs in obsolete sectors like oil and gas where highly skilled workers are being shed faster than they can justly transition into equivalent renewable jobs or, perhaps worse, they are being retained in a sector that is causing catastrophic damage to the planet.
One thing to understand from the start of this discussion is that we must be clear about what we actually mean by “jobs supported” by a sector. The report does this clearly (many do not) and splits things into three categories.
Direct employment are the jobs that are actually, directly involved with the renewable sector in question. Think of a rooftop solar installer, or an engineer employed to repair an offshore wind turbine. There were 16,800 “direct” jobs linked to the renewable energy sector in Scotland in 2024.
Indirect employment is involved with the supply chain of the sector – where those engineers source their parts, who manufactured the turbines etc. These are the jobs that were largely promised to Scotland in compensation for the terrible ScotWind auction, for example, and which look to be drifting away as well. Scottish renewables supported 17,025 indirect jobs in 2024.
Finally there are the “inducted” jobs. This is the least direct form of support but it involves jobs supported by the spending of wages by renewable engineers. If you buy a coffee on the way to the office every morning then your wages are “inducing” a job in the barista sector. If you start working from home and the coffee shop loses you as a customer, then you could say that your office job was “supporting” the coffee shop. When the report mentions that there are about 825 full time equivalent jobs in Scotland being supported by the renewables sector, they are less likely to mean that wind turbine companies are hiring artists and more likely to mean that wind turbine engineers are spending a small portion of their wages on arts and entertainment which could mean anything from going to the opera to having a Netflix subscription.
This kind of induced support is difficult to measure (reports like the FAI one tend to use economic modelling rather than asking employees about their coffee habits) and can be easier to manipulate (back in 2016 I found in my paper on fracking that shale gas companies would claim “jobs supported by fracking” as things like the postal worker who delivered mail to the office – not exactly a job that would disappear if fracking was banned). There were 14,075 jobs “induced” in Scotland as a result of the renewables sector.
So 49,200 jobs in total in 2024, and that’s up from 42,800 the previous year. What we are seeing in those two years though is that while the number of direct jobs has gone up, the number of indirect and induced jobs hasn’t increased by the as much. In other words, new direct jobs aren’t having as much of a “spillover” effect into the general economy.
The other side of “jobs created” is that actual value of the jobs to the economy. Economists love their TLAs (Three Letter Abbreviations) so it’s good to know what they are. The primary one here is GVA – Gross Value Added. The monetary value of the new goods or services created by the jobs in a year. GDP – the TLA most beloved by politicians – is GVA plus the value of subsidies and minus the taxes paid along the chain of goods being produced and sold. GNI – gross national income – is the portion of GDP that actually stays in Scotland so includes money imported from abroad or, as is more acutely the case, profits being extracted from foreign-owned businesses in Scotland. We don’t know what the GDP or GNI figures are from this report or more broadly, but this is the kind of information that I would like a Scottish Statistics Agency to gather. With the Scottish renewables sector being so highly foreign owned it is very likely that a substantial amount of money is being extracted from Scotland by the renewables sector. If the average level of profit extraction across all sectors is close to 6% of GDP, I would really like to know if renewables are proving to be more or less than that. But this isn’t data we currently gather about Scotland.
“Rather than building our future, much of the “value” of the Scottish renewables sector is just people getting rich by skimming profits out of the ground under our feet.”
Back to GVA though, there are clearly going to be jobs that are “worth more” to the economy than others. As you can see from our graph of the week this week, there are sectors (like construction or manufacturing) that are creating a lot more jobs than they are value and there are sectors (like financial services and real estate) that are creating a lot more value than they are jobs.
The “average” job supported (directly, indirectly or induced) by the renewables sector in Scotland creates about £100,000 of value in a year. The “most valuable” job in the sector is, by far, real estate at more than £660,000 per job. There is a LOT of money to be made by buying and selling land for the purposes of flipping it around renewable energy developers. You don’t even need to have a wind turbine or a solar panel ready to install to do it. Just buy a cheap field from an elderly farmer, get planning permission to put a bunch of renewables on it, convince Ministers to override objections from the local community, and then sell the land with the permission at a solid multiple of the price you paid (a good chunk of the Scottish data centre industry is based on this business model too).
The least valuable winner from the renewables sectors are the aforementioned artists and in the accommodation and food sector (i.e. jobs “sustained” via putting construction workers up in hotels while they work rather than employing local workers). This speaks to the chronic low pay in both of those sectors and it’s why I’m interested in getting the Artists’ Minimum Income up and running as soon as possible, but that’s another article. Both of these sectors create less than a third of the average value per job.
There’s an interesting note in this data though. Might it surprise you that construction and manufacturing creates a “below average” level of value per job, despite that being the sector that politicians hype the most while talking about “supply chain benefits”? This is because when we talk about manufacturing in Scotland, we’re not talking about building wind turbines and solar panels. We don’t do a lot of the former here and almost none of the latter. That means that construction is more about installation than it is about primary manufacturing. Buried in this data therefore is the failure of successive governments to prime Scotland to really take advantage of the renewables transition. Rather than building our future, much of the “value” of the Scottish renewables sector is just people getting rich by skimming profits out of the ground under our feet. It’s not too late to change this but I think we need to start looking longer term. The demands of the climate emergency mean that it is inevitable now that the vast bulk of the future growth in renewables (which will largely come from solar and batteries) will simply be imports from China, but that infrastructure has a finite lifetime measured in a number of years approximately equal to the amount of time it took China to become such a massive global player in the sector.
This means that Scotland could invest in building solar panel factories so that we can replace the current generation of panels when they reach end-of-life in a couple of decades. The same goes for batteries and wind turbines.
The thing is, to do that, we need to start investing now.
The alternative is that we just keep doing what we’re doing and then in 30 years when I’m at the point of retiring, my last article might be to wonder why landowners in Scotland are still so rich while we are still paying so much just to keep the lights on.
