Where Growth Meets Green: Competing for Talent in the Energy Transition

Globally, climate policy appears to have dropped down on the list of priorities in public and political debates. This shift was evident at this year’s World Economic Forum in Davos, where discussions largely focused on geopolitical tensions. As a result, commentators spoke of ‘Davos’ climate resignation’ and that climate change had ‘retreated to the sidelines’. 

And perhaps this is no surprise. At a time when geopolitical conflicts are driving up oil prices, climate policy tends to remain on the agenda only when framed in economic terms – from energy independence and supply chain resilience to industrial competitiveness. What is often missing from this conversation, however, is arguably the most valuable resource any country has: talented people. As countries decarbonise their economies and production systems, they are also intensifying the competition for (skilled) workers and shaping global migration patterns. 

Could those countries that move ahead with the energy transition ultimately gain an economic advantage? 

‘The primary focus of research on climate change and migration was on people being forced to move because of climate impacts,’ says Alexandra Brausmann, environmental and resource economist and member of the Environment and Climate Research Hub (ECH) of the University of Vienna. ‘But as I started my research, I realised there is another dimension to this nexus of climate and migration, because countries trying to decarbonise need a skilled workforce.’ In other words: The energy transition itself may influence where people live and work. And this could provide a competitive advantage. 

Brausmann studies the economics of migration and environmental change. In an ongoing research project with Lin Zhang from the City University of Hong Kong, she is investigating how the transition from fossil fuels to green energy sources will impact labour markets, and which pitfalls countries should consider. 

For the study, Brausmann and Zhang defined a variable capturing whether a region is actively pursuing the energy transition. They then performed statistical regression analysis to identify relationships and trends in migration flows. The question behind it: Does pursuing an energy transition help countries to attract people? 

The answer, at least at first glance, is yes. ‘When we look at all countries together, we find a positive relationship. On average, countries that implement the energy transition tend to attract people,’ explains Brausmann. The drivers remain unclear. Some people may be drawn by well-paying jobs in renewable energy, electrified transport or other low-carbon industries. Others might move in response to changing living costs. Or simply because they have found a spouse in another country. 

However, the picture becomes more complex when the results are broken down by region. While Asia and the Americas (including South, Central and North America) appear to be gaining people, Europe, Africa and Oceania could be experiencing net outflows (see Figures below). 

‘What this suggests is that the energy transition in Asia and the Americas is attracting migration, whereas other regions are actually losing people,’ says Brausmann. ‘Those people are probably going to Asia and the Americas. The aggregate migration data shows overall trends, but we cannot tell who exactly is going where.’

Looking at Europe in particular, the researchers found that as the energy transition advances, migration between European countries actually significantly declines. Globally, Europe tended to see more people leaving than arriving, but this was not significant in the analysis. 

Is Europe falling behind in the battle for skilled workers? And if so, why? One reason could be that the strictly regulated and fast energy transition becomes a cost burden for people. On the other hand, it may reduce ‘push factors’ within the region that historically motivated people to move to other European countries. 

While the analyses provide first insights, Brausmann cautions that they should be taken with a grain of salt as they have not yet been published. Still, they raise the question: What may lie behind these trends? And what migration policies should accompany the energy transition? 

A key factor why people willingly migrate to other economies, is that they compare their expected income with the cost of living in their destination country. ‘If I am a skilled worker in one country and hear about job opportunities elsewhere, I will of course consider the wage I might earn there. But that is only one part of the story. I also have to think about how expensive it is to live in that country,’ Brausmann explains. 

The catch: The energy transition influences both sides of this equation! On the one hand, it is creating new well-paying jobs, often in sectors that require specialised workers. On the other hand, climate policies such as carbon taxes or higher energy prices may increase the cost of living in these countries. 

‘The energy transition shows up in both wages and living costs,’ says Brausmann. ‘In that sense, it is a double-edged sword.’ People who migrate therefore tend to compare what economists call real earnings, i.e. income adjusted for living expenses. For a country to be an attractive destination, there are two options: Either the earning potentials of its green industry must rise faster than living costs increase. Or living costs must be purposefully adjusted. 

This mechanism is important because the energy transition depends on human skills – be it for building renewable energy infrastructure, developing battery technologies, designing new urban transport systems, or improving energy efficiency in buildings. Consequently, countries trying to decarbonise their economies find themselves competing for engineers, technicians, and other qualified workers. ‘Green sectors tend to be more skill-intensive. And countries are always hungry for skilled workers,’ says Brausmann. 

She urges governments to view migration policy as one of the instruments of climate policy. Countries seeking to accelerate the energy transition could attract qualified workers by offering targeted incentives, such as tax breaks, improved working conditions, and social benefits like childcare, housing subsidies, and pension advantages. In short, they could use climate and migration policies to boost their economies. 

Such policies are not unprecedented outside the energy sector, as Brausmann points out. Several countries, such as Canada, Australia and New Zealand, already have points-based immigration systems based on factors like education and work experience. At the same time, governments should expand benefits to domestic experts in order to prevent loss of their existing workforce. 

‘However, attracting migrants is not necessarily a policy goal in itself for many countries,’ Brausmann adds. Many countries seek to attract only skilled workers, while maintaining strict immigration controls for others through complex visa regimes and qualification requirements. This shift has been observable in European migration policy in the last decade. 

Also, the competition for green skills raises questions about fairness in the global system. If advanced economies attract a large portion of the workers needed for decarbonisation, countries with fewer resources may struggle. 

‘In that case, some countries would effectively pull in the skilled workforce while others are left without the people they need to implement their own energy transition,’ Brausmann says. Many developing economies cannot (yet) advance climate policy because they have good reason to prioritise improving their healthcare systems, expanding education and reducing poverty. If these countries also lose skilled workers to richer economies, their efforts to implement climate and energy policies could come to a standstill. 

For Brausmann, understanding the connection between migration and climate policy is an essential first step to implement measures for ensuring that the energy transition is fair and equitable. Moreover, migration by itself does not necessarily weaken countries of origin, she argues. Economists have long debated the phenomenon of brain drain, in which highly educated workers leave their home countries. But there is also the possibility of a local brain gain, where just the prospect of migrating can motivate people to invest more in education and skills. 

‘Some people acquire skills because they hope to migrate, but not everyone ends up leaving. Some cannot obtain visas, others change their plans or decide to stay for family reasons,’ Brausmann says. As a result, the domestic workforce may still become more qualified. 

In addition, many advanced economies, as well as more developed countries in the global South have vast experience with the so-called guest-worker system, where workers are allowed to work in the country of destination for fixed-term contracts before returning home. Although there are also objections to this system, Brausmann highlights some of its advantages. ‘By doing so these workers bring new skills and experience, as well as substantial savings that they subsequently invest in their home economies, creating new businesses and contributing to the overall improvements in the standard of living and development,’ she says. 

Ultimately, the energy transition could reinforce global inequalities, or it could create new opportunities. For countries committed to decarbonising, the transition could be a matter of strategic competitiveness. ‘Instead of focusing on restriction and regulation, countries should prioritise and incentivise jobs, innovation and future industries. That is the climate story we need to tell!’ urges Brausmann. The outcome of the energy transition will depend not only on climate policies, but to a large extent on the economic and migration policies that accompany it. These will determine where the people capable of building green industries choose to live and work.