Forecasts of the impact of a full implementation of the Paris Agreement by 2030 indicate that GDP in the EU could rise by an additional 1.1% and employment by 0.5% (Eurofound, 2019). This is compared to a scenario without climate action policies. However, existing megatrends such as digitalisation and automation present challenges to any neat forecasts relating to the greening of the economy.
Some of the risks of greening the economy are clear, particularly in relation to the uneven distribution of impact across territories, industry sectors and sections of the labour market. The European Commission has identified three sectors it expects to decline and a further four expected to be transformed by the transition to a carbon neutral economy (European Commission 2018). The former includes coal and lignite mining, plus crude oil and gas extraction together with mining support services. These industry sectors, which are likely to disappear completely, account for around 338,000 jobs in the EU (Bruegel 2020). The sectors expected to transform, are chemical manufacturing, non-metallic-mineral manufacturing, basic metal manufacture and the automotive sector.
As many of the most affected industry sectors are characterised by regional clustering, this means that the geographical impact will also be uneven, both amongst and within EU Member States. Consequently, the employment implications vary from region to region, as Figure 1, below shows.
A key consideration is how these jobs will be replaced. The latest EU data (European Commission, 2019) shows that absolute numbers working directly in the ‘Green Economy” remain relatively small, at 4.5 million in 2016. However, related low carbon industries and service sectors producing less than 10 per cent of all CO2 emissions, employ more than 70 per cent of the EU workforce. Encouragingly, they are also the sectors with the strongest employment increases: 7.5 per cent increase in the period 2013–2018 (1.5 per cent annually) compared to 3.4 per cent (0.7 per cent) in the other sectors (Griffin et al, 2019)
Another important dimension is the skills distribution within industry sectors. Across the board the proportion of low-skilled occupations will decrease in the transition to carbon neutrality. This will exacerbate skills mismatches already evident and widely acknowledged in Europe. The figure below shows the current skills mismatches between existing non-green jobs and emerging green jobs, analysed by sector. Projections suggest that construction, transport and public administration will see the largest increases in high-skilled job growth associated with the climate neutral transition. These shifts have significant implications for Europe’s skills agenda.
On an optimistic note, there are indications that active climate change policies – such as the European Green Deal – will contribute to inclusive job growth. Provided that there is effective reskilling and labour market support, these policies should add middle-skilled and middle-paying jobs, especially in the services and construction sectors. Figure 3 illustrates the European Commission’s estimates on this:
The most vulnerable territories and social groups will be where the risk factors overlap. For example, older low skilled workers in carbon-intensive industry clusters across Europe. There are also gender dimensions to this shift. One specific challenge will be the fact that training participation rates need to improve, particularly in those energy intensive industries where they are currently low. (Griffin, 2019) Evidence from other transition experiences underlines the need for collaborative approaches to effectively support the most vulnerable in these transitions. Locally focused governance models with active involvement of all stakeholders and high levels of trust appear to have been particularly effective.
 Cameron A, et al (2020). A Just Transition Fund: How the EU budget can best assist in the necessary transition from fossil fuels to sustainable energy. Breugel for the European Parliament Budget Committee
 This includes waste management, environmental protection and energy preservation
 Compared, for example to Europe’s ICT industry that employs 7.4 million people