UNDP Vietnam: Green jobs and employment impacts of green transport development policy
Cambridge Econometrics, in collaboration with UNDP Vietnam, Vietnam’s Transport Development and Strategy Institute and Institute of Labor and Social Sciences, successfully developed the first application a non-equilibrium whole-economy simulation model in Vietnam. The modelling showcased substantial benefits to employment and green jobs of delivering 2030 emissions reduction targets in the road transport sector.
As climate change becomes a more prominent topic in international policy debates, it is increasingly important for developing economies to have access to comprehensive analysis and technical capacity building to create a deep understanding of their unique economic opportunities and trade-offs.
Connecting stakeholders with relevant and user-friendly analytical tools is a key part of this initiative. However, it is often hindered by limited data availability and awareness of the full range of quantitative techniques. Although long-term planning tools are becoming more widely available, they are often based on strict theoretical assumptions and do not sufficiently consider uncertainties and mid-term possibilities that accompany a major structural process, such as the low-carbon transition in rapidly emerging economies.
FRAMES: Vietnam
The model used for the analysis was FRAMES: Vietnam, which is based on Cambridge Econometrics’ Framework for Modelling Economies and Sustainability (FRAMES).
FRAMES is a single-country framework designed to support modelling work for countries where data is limited, and allows for more detailed analysis of countries that are not individually represented in Cambridge Econometrics’ flagship global macro-econometric model E3ME.
The FRAMES: Vietnam model allows users to track sectoral value chains and perform economic impact assessments that consider interactions between economic agents. It is forward-looking, flexible to data availability and user requirements, and integrates the economy, energy systems and the environment with two-way linkages between each component into one consistent framework.
The model was tailored with Vietnamese statistics to assess a policy package in the road transport sector that is compatible with Vietnam’s Nationally Determined Contributions (NDC), covering energy efficiency, load factor improvements, modal shifts and fuel switching measures. The analysis of this “what-if” scenario and the potential scale of employment opportunities is made possible particularly by the relaxation of equilibrium assumptions which typically imply resource allocation and efficiency losses in response to new policies.
The scenario analysis in FRAMES: Vietnam provided key insights to inform the understanding and decision-making of Vietnam’s Ministry of Transport and stakeholders:
Successfully delivering the low-carbon transition in Vietnam’s road transport sector is expected to have marginally positive overall impact on Vietnam’s GDP. However, this will involve major restructuring at the sectoral level, including reduced reliance on imports of non-biofuel liquids and demand for activities that provide infrastructures to local production of petroleum products.
By 2030, the NDC policy package is projected to generate more new jobs in the biofuels and electricity and rail transport sectors due to modal and fuel switching, than it will displace existing jobs in petroleum extraction and manufacturing, wholesale and construction.
The demand for high-skilled workers and green jobs will rise significantly , supporting continued economic growth. However, lower-skilled jobs in the fossil fuel supply chain and informal jobs are likely most at risk of displacement and will require targeted training and relocation programs to ensure a just transition.
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