Renewable energy stimulus can create three times as many Australian jobs as fossil fuels

Adam Morton Environment editor
Photograph: Mick Tsikas/AAP

Stimulus programs backing clean energy as a path out of recession would create nearly three times as many jobs for every dollar spent on fossil fuel developments, according to a financial consultancy analysis.

The assessment by professional services firm Ernst & Young (EY) says a government focus on renewable energy and climate-friendly projects to drive the economic recovery from the Covid-19 pandemic could create more than 100,000 direct jobs across the country while cutting greenhouse gas emissions.

Commissioned by environment group the World Wide Fund for Nature, the EY report suggests fast-tracking wind and solar farms that have already been approved, increasing electricity transmission capacity and backing new industries in battery manufacturing, electric buses, renewable hydrogen and manufacturing powered by renewable energy.

Related: Seizing the moment: how Australia can build a green economy from the Covid-19 wreckage

It estimates every $1m spent on renewable energy and exports creates 4.8 full-time jobs in renewable infrastructure or 4.95 jobs in energy efficiency. By comparison, $1m on fossil fuel projects has been found to create 1.7 full-time jobs.

That suggests that if 10% of what the federal and state governments had indicated they would spend in response to Covid-19 was directed towards clean projects it could create 160,000 jobs.

“It represents a fraction of the immediate government stimulus package while generating significant job numbers and reorienting the economy towards a more strategic, low-carbon trajectory,” it says.

It follows a push by the United Nations, banks, investors and financial institutions, and a cross-sector collection of groups representing much of Australian society including business organisations for measures to help recovery from Covid-19 to also address the climate crisis.

While several countries, including the European Union, South Korea and Canada, have backed green recovery measures, an analysis by Bloomberg New Energy Finance found the vast majority of stimulus money so far announced by governments would prop up the fossil fuel economy. The Morrison government has called for a recovery built on gas.

The EY report suggests about 58,000 jobs could be created in construction by clearing the way to accelerate the development of solar and wind farms that had already been planned.

WWF also called for a federal renewables stimulus package of nearly $2bn, including 90% to be spent in the next two years, saying it could generate nearly $10bn of economic benefits. The largest portion, $520m, would be spent on improving energy efficiency and increasing renewable energy in manufacturing, with a goal of Australia becoming a global clean energy manufacturing hub.

Other recommended programs would help create manufacturing industries in batteries and electric buses and cut the cost of solar power for thousands of community organisations. It also recommends further boosting support for renewable hydrogen, which the government and industry have identified as a potential major export industry and local energy source.

Related: Business, unions and green groups call for sustainable Covid-19 recovery with clean energy transition

Nicky Ison, WWF Australia’s energy transition manager, said federal, state and territory governments had an opportunity to rebuild the economy in a way that set it up for prosperity in a world that valued low-carbon goods, in line with the Paris agreement.

She said an energy efficiency drive was a “no regrets” approach as it cut emissions while improving productivity, and an economic rebuild based on renewable energy could re-employ people in industries that had suffered some of the biggest job losses, including construction, manufacturing and professional, scientific and technical services.

“We think that this is a moment. The economy was struggling before the Covid crisis and it is struggling even more now, but a clean stimulus package can address issues holding back renewables and get the ball rolling on more than 100,000 jobs,” she said.

A leaked report by a taskforce advising Australia’s National Covid Coordinating Commission focused on finding ways to lower the cost of gas to help manufacturing recover and did not considers alternatives. Government agencies have found renewable energy is cheaper than fossil fuels. The commission’s chair, Nev Power, later distanced himself from the recommendations in the leaked report but backed gas as central to the recovery.

An assessment by the Intergovernmental Panel on Climate Change, commissioned at the Paris summit by all signatories including Australia, found limiting global heating to 1.5C above pre-industrial levels was likely to require the world reaching net zero emissions by 2050. The Morrison government has not set this target for Australia.

Scientific analyses have found under current policies the world is currently headed for more than 3C of warming, an increase scientists have warned would lead to significant ecological collapse.