Editing IPCC:AR6/WGIII/Chapter-9 (section)

==== 9.8.5.3 Macroeconomic Effects ====

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Investments required for the implementation of mitigation actions, create, mainly in the short-run, increase in the economic output and employment in sectors delivering energy efficiency services and products, which are partially counterbalanced by less investments and lower production in other parts of the economy ( [[#Yushchenko--2016|Yushchenko and Patel 2016]] ; [[#European%20Commission--2016|European Commission 2016]] ; [[#Thema--2017|Thema et al. 2017]] ; [[#US%20EPA--2018|US EPA 2018]] ) (see also Cross-Working Group Box 1 in Chapter 3). The magnitude of these impacts depends on the structure of the economy, the extent to which energy saving technologies are produced domestically or imported from abroad, but also from the growth cycle of the economy with the benefits being maximised when the related investments are realised in periods of economic recession ( [[#Mirasgedis--2014|Mirasgedis et al. 2014]] ; [[#Yushchenko--2016|Yushchenko and Patel 2016]] ; [[#Thema--2017|Thema et al. 2017]] ). Particularly in developing countries if the mitigation measures and other interventions to improve energy access (Figure 9.19) are carried out by locals, the impact on economy, employment and social well-being will be substantial ( [[#Mills--2016|Mills 2016]] ; [[#Lehr--2016|Lehr et al. 2016]] ). As many of these programs are carried out with foreign assistance funds, it is essential that the funds be spent in-country to the full extent possible, while some portion of these funds would need to be devoted to institution building and especially training. ( [[#Mills--2016|Mills 2016]] ) estimated that a market transformation from inefficient and polluting fuel-based lighting to solar-LED systems to fully serve the 112 million households that currently lack electricity access will create directly 2 million new jobs in these developing countries, while the indirect effects could be even greater. [[#IEA--2020a|IEA (2020a)]] estimated that 9–30 jobs would be generated for every million dollars invested in building retrofits or in construction of new energy efficient buildings (gross direct and indirect employment), with the highest employment intensity rates occurring in developing countries. Correspondingly, 7–16 jobs would be created for every million dollars spent in purchasing highly efficient and connected appliances, while expanding clean cooking through LPG could create 16–75 direct local jobs per million dollars invested. Increases in product and employment attributed to energy efficiency investments also affect public budgets by increasing income and business taxation, reducing unemployment benefits, and so on. [[#Thema--2017|Thema et al. (2017)]] , thus mitigating the impact on public deficit of subsidising energy saving measures ( [[#Mikulić--2016|Mikulić et al. 2016]] ).

Furthermore, energy savings due to the implementation of mitigation actions will result, mainly in the long-run, in increased disposable income for households, which in turn may be spent to buy other goods and services, resulting in economic development, creation of new permanent employment and positive public budget implications ( [[#IEA--2014|IEA 2014]] ; [[#Thema--2017|Thema et al. 2017]] ; [[#US%20EPA--2018|US EPA 2018]] ). According to [[#Anderson--2014|Anderson et al. (2014)]] , the production of these other goods and services is usually more labour-intensive compared to energy production, resulting in net employment benefits of about 8 jobs per million dollars of consumer bill savings in the US. These effects may again have a positive impact on public budgets. Furthermore, reduced energy consumption on a large scale is likely to have an impact on lower energy prices and hence on reducing the cost of production of various products, improving the productivity of the economy and enhancing security of energy supply ( [[#IEA--2014|IEA 2014]] ; [[#Thema--2017|Thema et al. 2017]] ).

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