The skilled worker shortage in decarbonization

In short

Advancements in technology and decreasing costs in wind and solar power are driving a rapid transition from fossil fuels to a low-carbon energy system. However, to meet the targets set out in the Paris Agreement, the deployment of climate technologies must accelerate well beyond the current rates. The European Union – especially Germany – is facing a significant shortage of skilled workers, presenting a major challenge to achieving its ambitious climate goals. This article examines the scale and underlying causes of this issue, while exploring potential solutions.

Scale and causes of the shortage

The shift to a low-carbon economy is driving the creation of well-paying jobs across green industries, especially in climate solutions. This work includes labor-intensive roles ins planning, engineering, installation, maintenance and repair. In the US, two years after the Inflation Reduction Act (IRA) was enacted, companies have announced 646 clean energy projects, alongside 334,565 new jobs and over $372 billion in investments. However in the European Union, many countries are grappling with a serious shortage of skilled workers needed to support these green initiatives. In Germany alone, an estimated 216,000 skilled workers are needed to expand solar and wind power infrastructure, while the EU as a whole must reskill approximately 18 million people to achieve its climate goals. This shortage stems from an aging workforce, a declining number of young entrants into the job market, and immigration policies that do not sufficiently attract skilled labor. Moreover, many educational institutions have yet to fully integrate renewable energy technologies into their curricula. 

Potential solutions

To address the skilled worker shortage, various solutions are being implemented or explored at both the EU and national levels. A central initiative is the EU’s effort to standardize qualifications across member states, making it easier for workers to move within the region. In Germany, clean energy skills are being incorporated into the core curriculum for electricians and other relevant trades, with proposals to expedite the certification process for solar panel installers and other key professions. Additionally, the European Social Fund Plus (ESF+) is offering financial support for green skills training initiatives. 

In the private sector, companies aim to maximize the efficient use of qualified labor – a valuable and limited resource – and to leverage talent from all available sources. Specialized service providers, such as Vento, address the skills shortage by focusing on a targeted set of high value-add activities. By developing deep technical expertise and strategically managing talent across regions, these providers enable businesses to benefit from economies of scale and higher utilization rates. This approach allows customers, owners and operators of climate infrastructure assets, such as solar parks or wind parks, to outsource deployment and maintenance tasks to these experts, ensuring efficient and reliable operations. 

Now what?

The current skills shortage poses a significant barrier to both ongoing and future decarbonization efforts. Despite numerous public and private initiatives working to better align labor market supply with demand, addressing this shortage remains a formidable challenge. The Boston Consulting Group warns that this shortage alone could contribute to an additional global temperature rise of 0.1°C, pushing the 1.5°C target further out of reach. To effectively address this issue, a coordinated and well-funded effort is needed from governments, educational institutions, and the private sector to develop a skilled workforce that can drive the energy transition forward.