Is there a trade-off between energy consumption and employment: Evidence from India

Abstract

Following India’s efforts to mitigate the emission of greenhouse gases, there has been a transition from fossil fuels to clean energy sources, such as solar and wind, in the energy portfolio. The renewable energy sector is widely acknowledged as a fertile ground for employment creation, as it is labour-intensive. Against this backdrop, the main objective of this paper is to provide an empirical explanation of how the growth of renewable energy sources, particularly solar photovoltaic (PV) technology, affects employment creation in India. The findings reveal that, despite a substantial investment in India’s solar PV technology, the number of jobs created by the sector declined marginally from 164000 in 2017–114000 in 2018. India’s estimated employment elasticity is just 0.004, implying that the level of employment does not show a significant positive response to changes in installed capacity. Almost 60 per cent of the global solar PV workforce is in China, which has become the leading country both in terms of installed capacity of global solar PV technology and manufacturing of solar PV cells and modules. The wide disparity in solar PV employment between India and China is explained by the former’s excessive dependence on China for solar PV cells. Alongside climate conservation, India should, therefore, place more emphasis on revitalising the domestic solar manufacturing industry to bring about efficient use of the nation’s untapped resources.