GridLab: The economic impacts of decarbonisation in Wisconsin

The transition towards a net-zero economy is challenging technologically, economically and socially, and with significant state-level policy differences. In this analysis, Cambridge Econometrics applied our E3-US macroeconomic model to quantify the economic impacts of decarbonisation pathways for Wisconsin to inform policymakers about the job and gross state product implications of different scenarios. The state-level results are disaggregated to Wisconsin sub-regions, sectors and occupations to evaluate the inclusiveness of the transition at a regional level.

The overarching finding is that ambitious economy-wide decarbonisation in Wisconsin can achieve net-zero emissions by 2050 while benefitting the economy as well. And the economic gains are substantially larger for this scenario compared to phasing in the clean energy sector (without broader policy changes).

The state of Wisconsin is currently heavily reliant on fossil fuels (coal and gas) for its energy. The transition to low- and zero-carbon electricity therefore involves a substantial change to Wisconsin’s existing power sector.

Investing in supply and demand measures to reduce emissions creates numerous new jobs directly in the manufacturing and construction sectors and indirectly in the services sector through the additional disposable income of households. The new jobs are distributed roughly equally across skill groups, providing an inclusive economic transition in Wisconsin.

Building on the energy system analysis carried out by Evolved Energy Research, Cambridge Econometrics assessed how different levels of investment in low- and zero-carbon power generation and demand-side technologies could affect the Wisconsin economy.

What we did:

• Compared two decarbonisation scenarios against a baseline using the E3-US macroeconomic model customized for Wisconsin.
• Employment impacts were disaggregated at the Workforce Development Area (WDA) level to evaluate the effects at a more detailed regional level.
• Estimated the job impacts by occupation and the potential skills gaps and needs that might arise within the decarbonisation scenarios.

 Key findings:

• Transitioning to net-zero emissions in Wisconsin through a combination of clean electricity generation and demand-side energy and emissions reductions, could have substantial economic benefits for the state economy.

• Growing over time as these policies are implemented, shifting away from the use of fossil fuels and increasing energy efficiency across the economy results in up to a 3.0% increase in GSP and 68,000 additional jobs by 2050.

• Jobs would be created across the Wisconsin economy in accordance with the scale of climate action. Key sectors impacted include electricity generation, but also manufacturing and construction activities (linked to the investment in new generating capacity and other technologies), and business and consumer services.
• Wisconsin has a leading power sector technology industry cluster that would benefit from this kind of net zero economy-wide policy.

• The Wisconsin labour market has a highly skilled workforce that has the potential to take up the new jobs created, with the relevant training and reskilling. Decarbonisation is expected to create employment opportunities at all skill levels, part of a more inclusive economy transition.

• The greatest winners of the transformation are the regions of Wisconsin with the largest construction and manufacturing industries, such as the Bay Area and Waukesha-Ozaukee-Washington.

• The two other large Workforce Development Areas, Milwaukee and South Central, can be expected to attract the high-skilled and skilled non-manual workers, reflecting the existing presence of low carbon industries and their expected continued expansion.