Environmental Goods and Services Sector: employment and value added

Briefing Published 29 Nov 2018 Last modified 07 Dec 2018
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Environmental Goods and Services Sector: employment and value added

Indicator

EU indicator past trend

 

Selected objective to be met by 2020 

Indicative outlook
for the EU meeting
the selected
objective by 2020

Employment and value added in the environmental goods and services sector (EGSS) compared with the whole economy

Employment in the EGSS as a share of employment in the whole economy

Green triangle: improving trend

EGSS value 
added as a share of Gross Domestic Product 

Green triangle: improving trend

Promote a larger market share of green technologies in the Union and enhance the competitiveness of the European eco-industry — 7th EAP


Stable or unclear trend

Employment and value added in the environmental goods and services sector have been growing faster than in the rest of the economy between 2003 and 2015, although since 2012 growth in the sector’s value added slowed and employment remained more or less stable. The 2020 prospects for continued higher growth and employment creation in the sector compared with the rest of the economy are uncertain. They are also dependent on the sector competing with equivalent sectors in China and the USA, and on continuing ambitious renewable energy and green growth policies in Europe.

For further information on the scoreboard methodology please see Box I.3 in the EEA Environmental indicator report 2018

The Seventh Environment Action Programme (7th EAP) calls for strengthening the market share of green technologies and enhancing the competitiveness of eco-industries by 2020. Indeed, the EU environmental goods and services sector (EGSS) has grown faster than the rest of the EU economy in terms of both employment and value added over the period examined (2003-2015). During this period, EGSS value added grew by 63 % and employment by 38 %, while overall the economy grew by 16 % and employment by 6 %. The main driver of the expansion of the EGSS was growth in the renewable energy and energy efficiency sectors, while an increase in public sector spending on green infrastructure also played a role. Since 2012, the growth in value added in the EGSS slowed and employment creation remained relatively stable mainly as a result of increasing global competition and a reduction in domestic investments in renewable energy. The EGSS will need to retain global competitiveness to achieve the 2020 7th EAP objective. This could be aided by continuing ambitious renewable energy and green growth policies in Europe.

Setting the scene 

In the context of globalisation and technological change, the green economy offers potential for growth. The 7th EAP reflects the objectives of the Europe 2020 growth strategy towards a sustainable economy (EC, 2010), including growing employment in the green economy (EC, 2012). The 7th EAP (EU, 2013) calls for strengthening the market share of green technologies in the European Union and enhancing the competitiveness of European eco-industries. This will not only reduce the environmental pressures arising from economic activities but could also have important socio-economic benefits in terms of value added and employment. This briefing presents trends in value added and employment in the Environmental Goods and Services Sector (EGSS).

Policy targets and progress

The increased awareness of the need to combat environmental pollution and preserve natural resources as well as obligations to comply with the environmental acquis has led to an increase in the supply and demand of environmental goods and services, i.e. products to prevent, measure, control, limit, minimise or correct environmental damage and resource depletion.

The Europe 2020 strategy (EC, 2010) does not include quantitative targets for increasing employment or for output from the EGSS. Nevertheless, the EGSS’s environmental–economic accounts enable trends in headline macroeconomic indicators for the EGSS, such as value added and employment, to be reported, providing information on progress towards a green economy. The EGSS encompasses environmental protection activities — related to preventing, reducing and eliminating pollution and any other degradation of the environment — and resource management activities — which mainly include management of energy resources (renewable energy production, and equipment and installations for heat and energy saving).

Figure 1Employment and value added in the EU environmental goods and services sector (EGSS) compared with the whole economy

 Note: The GDP and EGSS value added was deflated to 2010 values using the GDP deflator. 

 

Figure 1 shows that, on average, since 2003, the EGSS has seen faster growth in employment and value added than the total EU economy. The sector’s contribution to gross domestic product (GDP) grew from 1.5 % in 2003 to 2.1 % in 2015, while the sector’s contribution to employment grew from 1.3 % in 2003 to 1.7 % in 2015. 

The value added in the EGSS increased by 63 % in the 2003-2015 period and reached EUR 286 billion (at 2010 prices) in 2015. Growth in the value added of environmental protection and of resource management activities has been strong. It has been particularly high in resource management, whose value added grew from EUR 50 billion in 2003 to EUR 126.7 billion in 2015 (at 2010 prices), an increase of 153 %. The growth in the value added of resource management was mainly because of growth in the renewable energy sector as well as in investments in energy efficiency (energy efficiency and energy saving activities and products). The value added of environmental protection activities still represent the major element of the value added of EGSS (EUR 159.4 billion in 2015 at 2010 prices). The relative contribution of these activities in EGSS growth, however, decreased considerably over the 2003-2015 period. The value added of the environmental protection activities increased by 28 % between 2003 and 2015.

Employment in the EGSS increased by 38 % in the 2003-2015 period and reached  4.1 million full time equivalent employees in 2015 (Figure 2). Employment trends were mainly driven by the growing importance of activities that manage energy resources, in particular the production of energy from renewable sources, the production of wind and solar power stations, and equipment and installations for heat and energy saving (Eurostat, 2018a).

Figure 2. Employment by industry groups in the EU environmental goods and services sector

 

NoteThe ‘electricity, water and waste’ category includes: electricity, gas, steam and air conditioning supply; water supply; sewerage, waste management and remediation activities. 

 

 

The value added and employment of the EGSS continued to grow relatively fast even in the years immediately after the 2008 economic downturn. This resulted partially from innovation and Europe’s competitiveness in the global market, but was also supported by public spending on environmental protection and renewable energy (Görlach et al., 2014; AIRS_PO2.13, 2018). Some of the most successful government interventions have been investment support schemes, which have provided investors with a high degree of investment certainty. Especially in difficult economic times, governments can play a significant role in supporting private investment in the EGSS by guaranteeing the certainty needed by investors (Görlach et al., 2014).

Despite the successes of the sector, recent trends are not so positive, with employment creation stagnating more or less and growth in value added having slowed in the sector since 2012. This may be explained by increasing competition from the United States and China (Görlach et al., 2014). It can also be explained by a decrease in domestic investments in renewable energy as a result of ongoing uncertainty over the future of support mechanisms and lower investment capacity in some EU Member States (Frankfurt School-UNEP Centre/BNEF, 2016), as well as because of a slow down by some Member States that have already met or are about to meet their 2020 renewable energy targets (AIRS_PO2.6, 2018).

Overall, the future prospects for growth of the EGSS remain uncertain and are strongly dependent on continuing ambitious renewable energy and green growth policies in Europe and how these impact on competition with the United States and China. It is nevertheless encouraging that compared with 2014 the EGSS (value added and employment) grew by 3 % in 2015 – mainly thanks to growth in energy efficiency and energy saving activities and products.

Outlook beyond 2020 

An expanding EGSS is a key factor in the transition to a low-carbon economy that is decoupled from resource use, as envisaged in the 7th EAP. Policies on energy efficiency and renewable energy (EC, 2015a; AIRS_PO2.7, and AIRS_PO2.6, 2018), and waste recycling (EC, 2015b; AIRS_PO2.3, 2018) cover a period beyond 2020, suggesting that there could be long-term growth in the EGSS. Further expansion of the EGSS could be assisted through ambitious renewable energy and green growth policies at the EU and national levels but also via more direct assistance such as investment support schemes that provide investors with a high degree of investment certainty.

About the indicator 

This briefing uses data from the EGSS account, which is a module of the European environmental–economic accounts. Environmental accounts analyse the interaction between the economy and the environment by organising environmental information in a way that is consistent with national accounts. The EGSS is defined as that part of a country’s economy that is engaged in producing goods and services that are used in environmental protection activities and resource management either domestically or abroad. The income created by the EGSS is expressed in terms of gross value added (at 2010 prices), which is the difference between output and intermediate consumption. Employment in the EGSS is expressed in terms of full-time equivalent jobs.

The data are broken down by industry (e.g. services, construction, etc.); environmental protection activity (e.g. wastewater management, waste management, protection of biodiversity and landscapes); and resource management activity (e.g. water management, energy resource management). Eurostat's estimates of the EGSS value added and employment at the EU level comprise all environmental protection activities and the key resource management activities, i.e. production of energy from renewable energy, energy efficiency and water management. Further efforts are being made to extend the scope of the EGSS sector towards a more complete and accurate accounting of EGSS activities (Eurostat, 2018b).

Regulation (EU) No 691/2011 sets out the european environmental economic accounts. From 2017, reporting of data on the EGSS is mandatory with regard to market output; the reporting of non-market output, output for own-final use and ancillary output is still voluntary. Current data are a combination of Eurostat estimates with some Member State data reported through voluntary surveys. There are some comparability issues at country level, for example some environmental activities and/or products may not be fully covered and time series may not be available prior to 2014 which is why only EU-28 data are presented in this briefing. For more information please see Eurostat, 2016a, 2016b, 2018a and 2018b.

Footnotes and references

EC, 2010, Communication from the Commission ‘Europe 2020, A strategy for smart, sustainable and inclusive growth’ (COM(2010) 2020 final).

EC, 2012, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions ‘Towards a job-rich recovery’ (COM(2012)173 final).

EC, 2015a, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank ‘A framework strategy for a resilient energy union with a forward-looking climate change policy’ (COM(2015) 080 final).

EC, 2015b, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions ‘Closing the loop — An EU action plan for the circular economy’ (COM(2015) 614/2).

EU, 2013, Decision No 1386/2013/EU of the European Parliament and of the Council of 20 November 2013 on a General Union Environment Action Programme to 2020 ‘Living well, within the limits of our planet’, Annex A, paragraph 43 (OJ L 354, 28.12.2013, p. 171–200).

Eurostat, 2016a, ‘Environmental goods and services sector accounts — Handbook — 2016 edition’, Eurostat Unit E2 (http://ec.europa.eu/eurostat/documents/3859598/7700432/KS-GQ-16-008-EN-N.pdf/f4965221-2ef0-4926-b3de-28eb4a5faf47) accessed 24 September 2018. 

Eurostat, 2016b, ‘Environmental goods and services sector accounts — Practical guide — 2016 edition’, Eurostat Unit E2 (http://ec.europa.eu/eurostat/documents/3859598/7741794/KS-GQ-16-011-EN-N.pdf/3196a7bc-c269-40ab-b48a-73465e3edd89) accessed 24 September 2018. 

Eurostat, 2018a, ‘Statistics explained — Environmental economy — employment and growth’ (http://ec.europa.eu/eurostat/statistics-explained/index.php?title=Environmental_economy_-_employment_and_growth) accessed 20 September 2018.

Eurostat, 2018b, 'Production, value added, employment and exports in the environmental goods and services sector — Eurostat metadata' (http://ec.europa.eu/eurostat/cache/metadata/en/env_egs_esms.htm) accessed 20 September 2018. 

Görlach, B. et al, 2014, How crisis-resistant and competitive are Europe’s eco-industries, Ecologic Institute, Berlin (http://docplayer.net/9826167-How-crisis-resistant-and-competitive-are-europe-s-eco-industries.html) accessed 5 April 2018.  

Frankfurt School of Finance and Management, UNEP Collaborating Centre and Bloomberg New Energy Finance, Frankfurt, 2016. Global trends in renewable energy investment 2016 (http://fs-unep-centre.org/publications/global-trends-renewable-energy-investment-2016) accessed 5 April 2018. 

 

AIRS briefings

AIRS_PO2.3, 2018, Recycling of municipal waste, European Environment Agency.

AIRS_PO2.6, 2018, Renewable energy sources, European Environment Agency.

AIRS_PO2.7, 2018, Energy efficiency, European Environment Agency.

AIRS_PO2.13, 2018, Environmental protection expenditure, European Environment Agency.


Environmental indicator report 2018 – In support to the monitoring of the 7th Environment Action Programme, EEA report No19/2018, European Environment Agency

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