According to reports, India, China and South Korea are increasingly focusing on renewable energy sources, including wind and solar, as potential growth sectors for their economies, a World Economic Forum report said today.
The report, Energy for Economic Growth – Energy Vision Update 2012, which provides a framework for understanding the larger economic role of the energy industry, however, added that the higher costs of these technologies create trade-offs that must be considered.
“Energy prices will always be volatile and thus represent a challenge for long-term economic planning,” said Kenneth Rogoff, Thomas D Cabot Professor of Public Policy and Professor of Economics, Harvard University, the US.
The question is how to make this volatility less economically damaging, Rogoff, who is part of the WEF advisory board, added.
The oil and gas industry, the report said, contributed 37,000 direct jobs in 2011. This drove the creation of an additional 111,000 indirect jobs during the same period, given an employment multiplier effect of three. These 150,000 jobs represent 9 per cent of all jobs created in the United States in 2011.
While multiplier effects for solar and wind energy were lower during operation, their contribution during the construction phase also reached as high as 3.3 indirect jobs per energy job.
“The energy industry is unique in its economic importance and has the potential to be a tremendous catalyst for job creation and sustainable growth without harming the sector’s overall performance,” said Chairman Daniel Yergin of IHS CERA, which partnered in the preparation of the WEF report.
The energy industry is by nature capital intensive and requires high levels of investment. It thus has the ability to generate significant contributions to GDP growth, the report said.
In the US, the oil and gas extraction sector grew at a rate of 4.5 per cent in 2011 compared to an overall GDP growth rate of 1.7 per cent.
The sector’s highly skilled workforce is also well-paid compared to other sectors, the report noted.