Towards a green recovery in the EU: Aligning further emissions reductions with short- and long-term energy-sector employment gains

To tackle the negative socioeconomic implications of the COVID-19 pandemic, the European Union (EU) introduced the Recovery and Resilience Facility, a financial instrument to help Member States recover, on the basis that minimum 37% of the recovery funds flow towards the green transition. This study contributes to the emerging modelling literature on assessing COVID-19 vis-a-vis decarbonisation efforts, with a particular focus on employment, by optimally allocating the green part of the EU recovery stimulus in selected low-carbon technologies and quantifying the trade-offs between resulting emissions reductions and employment gains in the energy sector. We couple an integrated assessment model with a multi-objective linear-programming model and an uncertainty analysis framework aiming to identify robust portfolio mixes. We find that it is possible to allocate recovery packages to align mitigation goals with both short- and long-term energy-sector employment, although over-emphasising the longer-term sustainability of new energy-sector jobs may be costlier and more vulnerable to uncertainties compared to prioritising environmental and near-term employment gains. Robust portfolios with balanced performance across objectives consistently feature small shares of offshore wind and nuclear investments, while the largest chunks are dominated by onshore wind and biofuels, two technologies with opposite impacts on near- and long-term employment gains.

Automated summary

This study aims to assess the relationship between COVID-19 and decarbonisation efforts by optimally allocating the green part of the EU recovery stimulus in selected low-carbon technologies. The study finds that it is possible to achieve a balance between mitigation goals and short- and long-term employment in the energy sector by allocating recovery funds wisely, although prioritizing the long-term sustainability of new energy-sector jobs may be more expensive and vulnerable to uncertainties.