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Alyssa Fischer
Energy Efficiency Analyst, International Energy Agency

Over the course of 2020, countries around the world have felt the devastating impacts of COVID-19, including loss of life, skyrocketing unemployment, and the closure of small businesses. In response, governments have been hard at work developing and implementing rapid response plans to safeguard the health and well-being of their populations while stemming job losses and creating new opportunities. Energy efficiency investments as part of stimulus packages represent an opportunity for governments to achieve the irrecovery goals while supporting the clean energy transition. IEA’s analysis of the role of energy efficiency in recovery packages from years past indicates that considerable shares of stimulus spending will be put toward building, construction, and infrastructure initiatives, as
well as programs to incentivize large purchases, like cars, appliances, and other energy using technologies. Integrating energy efficiency principles into these types of programs has been shown to create jobs across the economy, especially in labor intensive sectors like construction and manufacturing and at small and medium-sized businesses. In fact, the IEA’s Special Report on Sustainable Recovery found that every USD 1 million of investment in energy efficiency measures creates around 10-15 jobs. Well-designed recovery programs can support this
existing workforce and create new opportunities. The IEA’s Sustainable Recovery Planoutlines policy measures and investments that could boost global economic growth by 1.1% per year and save or create 9 million jobs per year
while reducing global carbon emissions. About one third of new jobs would be created through investments in energy efficiency.

These energy efficiency investments can take a variety of forms. In the buildings and construction sector, energy efficiency improvements in housing, schools, hospitals, and government buildings can be effective at creating new jobs, with around 60% of the funds spent on home energy efficiency retrofits going towards labour.

Investment in infrastructure such as smart grids, public transportation systems, street lighting, electric vehicle charging networks, and next-generation digital networks can create jobs while accelerating the transition to sustainable, low-carbon energy systems of the future. For example, India’s National Street Lighting Programme upgraded approximately 11 million streetlights with efficient LEDs, delivering greenhouse gas emissions reductions of 5 million tonnes per year while creating around 13,000 jobs. Additionally, technology replacement programs that
provide incentives to consumers to replace old, inefficient products can improve consumer efficiency at scale while encouraging consumer spending, leading to jobs in the recycling, manufacturing, transport, and retail industries. For example, in Colombia in 2017, a program to replace one million inefficient refrigerators with new models that used 25% less energy delivered lower energy bills for consumers and reduced demand for energy subsidies among low-income house holds. An estimated 12,000 jobs were created by the program. Energy efficiency projects are often “shovel-ready,” cost effective, and improve economic competitiveness and resilience in the long-term, making them ideal for sustainable recovery from the COVID-19 pandemic.

The wide range of short- and long-term opportunities presented by energy efficiency means that there is a solution suited to every type of community, city or country. Leaders around the world have realized the unique value of energy efficiency; for example, the Global Commission for Urgent Action on Energy Efficiency is a coalition of global leaders from the private and public sector who have developed a comprehensive set of 10 adaptable recommendations based on best practices from around the world. Early, decisive action to integrate energy efficiency into every aspect of a recovery plan will be essential to maximize all potential benefits available. The inclusive, sustainable, and prosperous future the world needs depends upon it. IEA (2020), Energy efficiency and economic stimulus, IEA, Paris

These numbers represent global weighted averages for the gross direct and indirect jobs created by the spending.
Jobs that may be induced (or lost) by the subsequent spending (or saving) of the new workers are not included.
IEA (2020), Sustainable Recovery, IEA, Paris
IEA (2020), Sustainable Recovery, IEA, Paris
Scheer, J. and B. Motherway (2011), Economic Analysis of Residential and Small-Business Energy Efficiency
Improvements, Sustainable Energy Authority of Ireland, Residential-and-Small-Business-Energy-Efficiency-Improvements.pdf
Government of India’s UJALA & Street Lighting National Programme Complete Five Successful years of Illuminating India, 5 January 2020, (accessed 5 January 2020)
Streetlight National Program Dashboard, (accessed 25 March 2020)
Ministry of Mines and Energy of Colombia (2018), By replacing over one million refrigerators, the country is
undertaking concrete actions for climate change mitigation (News), 11 May 2018,
Recommendations of the Global Commission for Urgent Action on Energy Efficiency, IEA, Paris

Alyssa Fischer
Energy Efficiency Analyst, International Energy Agency