Renewable hydrogen is a central part of EU plans for a green post-Covid-19 recovery. It is touted first and foremost as a way to decarbonise difficult sectors such as energy-intensive industries and long-distance transport, the latter through hydrogen-based synthetic fuels, by replacing natural gas as a feedstock and fuel.
Bela Galgoczi at the European Trade Union Institute (ETUI) says hydrogen could be positive for jobs in manufacturing because it avoids a need to restructure existing industrial processes. “[In contrast], genuine redesign for a climate-neutral, circular economy would lead to structural changes and potentially less material use,” he says.
Yet studies so far that aim to put a finger on how many jobs green hydrogen could create, find its biggest potential lies not in industry, but in road transport and buildings, areas where policymakers are pinning their hopes primarily on direct electrification. There is, therefore, a potential mismatch between jobs and climate policies.
One million jobs by 2030
A recent study in the Netherlands, a country actively trying to transition away from natural gas, estimates that green hydrogen could preserve and create up to some 100,000 jobs a year by 2050. About two-thirds of these are jobs, notably in heavy industry, which would otherwise have been phased out with fossil fuels. About one-third are new jobs created by the introduction of hydrogen.
The research, aimed at helping regions and companies in the Netherlands make the case for post-Covid recovery funds for green hydrogen, was carried out by consultancy Roland Berger and has not been made public. It estimates employment effects sector by sector bottom-up, complementing two earlier top-down economic modelling studies.
The latest study’s estimates are at the upper end of its predecessors’ findings. A 2018–19 study for Gasunie, the Dutch gas network operator, estimated that a green hydrogen economy could result in 50,000–100,000 net preserved and new jobs by 2050. Meanwhile, a 2018 study by CE Delft, a research institute, put the figure at 20,000–80,000.
The CE Delft study was expanded and updated in April 2021 – at the request of Shell, a key player in hydrogen in the Netherlands – to take account of updated Dutch climate and hydrogen policies since 2018. The updated study, which now takes into account jobs in offshore wind, for example, estimates a green hydrogen economy could create 16,000 to more than 90,000 new jobs by 2050.
The upper end of the Dutch estimates also correlates with an industry-led Hydrogen Europe Roadmap. This foresees about one million jobs in hydrogen – no colour specified – in Europe by 2030 and 5.4 million in 2050. That is about three times the number of jobs in the EU chemical industry today. These figures are echoed at a global level by the CEO-led Hydrogen Council, which imagines a hydrogen economy employing more than 30 million people by mid-century.
Transport takes all
However, where in the economy hydrogen is used has a big impact on its job creation potential. It is precisely in those sectors where its use is currently most controversial – in vehicles and buildings – where it could have the biggest positive impact on employment.
Catrinus Jepma of the New Energy Coalition, a cross-sectoral organisation dedicated to the energy transition in the Netherlands, emeritus professor at the University of Groningen and lead author of the study for Gasunie, says job estimates are strongly shaped by the multiplier used for indirect jobs (a conservative 1.5 in his case versus two to five in the literature), and assumptions around end use.
Jepma says: “Most of the [green] hydrogen jobs are linked to its application, not production, transport or storage. Also, the more hydrogen goes to energy rather than feedstock, the more jobs, and the more hydrogen goes to [road] transport and buildings, the more jobs.” In his study, he estimates that about two-thirds of the hydrogen used in 2050 would be for energy (not industrial feedstock) and about one-third of that would flow to end uses in transport, buildings and agriculture (rather than industry).
CE Delft suggests that doubling the demand for green hydrogen would quadruple the number of jobs. That is because it assumes a greater share of domestic green hydrogen production in a higher demand scenario, but also because this assumes far greater use of green hydrogen in “labour-intensive” road transport and heating for buildings. Road transport is responsible for a “strikingly large share” of job creation in a high demand scenario.
The Hydrogen Europe Roadmap estimates that about one-third of all future hydrogen jobs would be associated with fuel cells. Competitive fuel cell electric vehicles could help “retain” the European automotive industry “while a switch to only BEVs [battery electric vehicles] risks delocalisation of value chains overseas”. This is based on the calculation that a fuel cell car contains far more components than a BEV and can therefore retain production and assembly labour in Europe.
Campaign group Transport & Environment (T&E) vehemently disagrees. BEVs are the most efficient zero-emission vehicle, says T&E’s Alex Keynes. Fuel cells may have applications in trucking, but not cars. “Making the energy transition more expensive is not going to create jobs,” he says.
Green trumps blue on jobs
Upstream, the European Commission estimates that every billion of investment in green hydrogen will create 10,000 jobs along the supply chain, two-thirds of those in renewable energy production and one-third in hydrogen production, transmission and storage. A study by consultancy Navigant for European gas networks operators in 2019 estimated that half the upstream jobs would be in renewable energy production, and that the green hydrogen economy could create as many as 1.5 million upstream jobs in the EU by 2050.
Blue hydrogen is less interesting from a jobs perspective than green hydrogen. Catrinus Jepma, New Energy Coalition
Jepma says blue hydrogen, made from natural gas with carbon capture and storage and often touted as a medium-term alternative to green hydrogen, is “less interesting from a jobs perspective than green hydrogen”. This conclusion is based on the fact that the underlying steam methane reforming technology is mature – unlike electrolysis – so there is not the same potential to establish an innovative domestic industry with related economic benefits.
The bottom line is that the shift to a low-carbon energy system is expensive, but should be good for job creation because such a system is more decentralised and labour-intensive. The potential for green hydrogen within that is only starting to be explored.
Eurogas, representing the European gas industry, is launching a two-year study with the European Federation of Public Service Unions and IndustriALL, under the auspices of the European Commission, to analyse what skills are needed where and how best to develop them as the gas sector moves to decarbonise. ETUI is working with the European Climate Foundation to study the employment effects of decarbonising heavy industry, including through hydrogen.
The updated CE Delft study warns of a parallel skills challenge to fill the new positions. “Already now, many companies are not finding the right, qualified personnel to realise the energy transition at the desired pace,” it warns. With fewer people entering professional technical education, the gap between supply and demand is likely to increase, it adds.
Policymakers need to worry about skills, jobs and climate change all at the same time. The quest to displace large volumes of natural gas in industry will need to go hand-in-hand with job creation, and, whether green hydrogen or green electricity powers the energy transition in this and other sectors, the biggest challenge is likely to be finding people with the right skills to do the job.
This is the fifth article in a special series on green jobs Energy Monitor is running around Labour Day on 1 May. The other articles in the series are:
- Investment in skills is key to realising the clean energy transition
- How to ensure workers don’t die in the name of the energy transition
- Joe Biden’s push to unionise US clean energy workers
- Finance sector skills shortage puts ESG in focus
- With local supply chains, electric vehicles can be good for jobs