Brookings Podcast on Economic Activity How will the clean energy transition affect wages?
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Dec 4, 2024 Conor Walsh, an economist at Columbia Business School, discusses the potential economic ripple effects of the clean energy transition. He reveals how cheap electricity from solar and wind could boost national wages by 2-3%. Walsh highlights the impact of lower energy costs on manufacturing and regional growth. He also explores the challenges of rising electricity demand and the importance of upgrading transmission infrastructure. The conversation sheds light on the overlooked economic benefits of clean energy and its role in wage growth.
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Causes of Clean Energy Growth
- Green electrical generation has significantly increased due to a combination of factors, including government support and market forces.
- The most impactful factor, however, has been a dramatic decline in the capital costs of clean energy technologies, especially solar and wind.
Economic Impacts of Clean Energy
- Renewable energy's low input costs put downward pressure on wholesale electricity prices.
- Increased renewable energy generation leads to lower market clearing prices, resulting in cheaper electricity overall.
Model for Projecting Economic Impacts
- The economic impact of falling electricity prices depends on how intensively electricity is used in production in different locations and industries.
- Areas with energy-intensive industries and good renewable resources will benefit most, but the model doesn't account for industry relocation.