Talent gap threatens to hold back progress on the global energy transition

While the energy industry undergoes a historical shift towards renewables, consumers and businesses may struggle to meet their needs – not because of a lack of resources, but due to a limited number of people who can develop and manage them.

That’s the observation from across the industry and experts that Energy Connects spoke to. It’s a matter of education, reskilling, and certifications, of course. Still, the culture and approach to the energy transition by policymakers and industry leaders can make a difference, the experts said. Other factors at play are the quality of investments and of the green incentives that can fire back by altering the market functioning and ultimately the right allocation of talents and skills.

True, skyrocketing demand for specialists in solar, wind, and other renewable energy technologies requiring installations signals that the clean energy job market will continue for the foreseeable future its rapid expansion. Concurrently, traditional energy sectors like oil, gas, and coal remain crucial components of the global energy supply chain, sustaining high employment levels for the foreseeable future.

“We cannot totally abandon fossil fuels yet as that industry is still extremely important,” Nicola Tagliafierro, Director of the Circular Economy Program at the European Institute of Innovation for Sustainability (EIIS), told Energy Connects.

“To fill crucial roles effectively, energy companies will have to recruit technical experts who possess deep knowledge of sustainability principles and circular economy practices. Increasingly, sustainability will be integrated into businesses and companies, rather than being constrained within a separate unit, individual role, or dedicated team.”
- Nicola Tagliafierro, Director of Circular Economy Program, European Institute of Innovation for Sustainability (EIIS)

While there is no one-size-fits-all solution, effective education is key to ensuring that the talent pipeline keeps up the pace of the transition. Reskilling for the existing workforce is equally important. And sooner rather than later, essential sustainability knowledge and skills will be required across core commercial, technical, and managerial functions, said Tagliaferro.

“To fill crucial roles effectively, energy companies will have to recruit technical experts who possess deep knowledge of sustainability principles and circular economy practices,” said Tagliafierro, who is also the co-author with EIIS Director General Andrea Geremicca of the book ‘Circular Economy Manager’. “Increasingly, sustainability will be integrated into businesses and companies, rather than being constrained within a separate unit, individual role, or dedicated team,” he said.

Finding and training the workforce is just as crucial as building the technology itself. Renewables will increasingly be a hotbed for innovation, both in energy production and enabling digital technologies, like artificial intelligence, sensors, and analytics.

Still, for all that to happen, the industry needs to be more inspired than it currently is by the sustainability and innovation values, according to Chris Grantham, the former Circular Economy Executive Director at IDEO, a London-based global strategic consulting and design business.

Those who are in charge and have a final word in both the public and private sectors need to reflect that approach including in the recruitment of a more sustainability-aware and tech-savvy workforce and in general in designing the rules for that process, he told Energy Connects.

“A key challenge to leadership and a key challenge of leadership is reframing the culture and mindset around value,” said Grantham, who is also the founder of the consultancy firm Regenovate, when asked about what the energy industry needs to successfully manage and complete the current transition.

“Those who are in charge and have a final word in both the public and private sectors need to reflect an approach based on sustainability and innovation, including in the recruitment of a more sustainability-aware and tech-savvy workforce … A key challenge of leadership is reframing the culture and mindset around value.”
- Chris Grantham, former Circular Economy Executive Director at IDEO

Experts argue a multipronged approach tackling the issue of educating or reskilling the industry workers from all angles is an urgent necessity. As a reminder, the current growth of renewable investments and the related demand of workers and resources is not driven only by economics with the so-called green energies becoming more competitive relative to traditional energy sources. The pressure from the investors in the financial markets matters, as it is magnified by regulatory developments, such as the taxonomy in the European Union and globally the climate-related rules from central banks and other institutions.

Moreover, mandates, subsidies, or other public policies weigh in and to some extent amount to the main factors in many nations in Europe and elsewhere.

“To the extent that this growth is driven by capital markets, it is sustainable in the sense that the price mechanism will sort it out,” Carlo Stagnaro, Research and Studies Director of the Bruno Leoni Institute in Rome, told Energy Connects. But if “that growth is driven by policies and subsidies, capital misallocation may occur.”

Stagnaro cites as an example those renewable generators being installed in places where there is little or no demand for additional green electricity. “And that just because subsidies make profitable an investment that otherwise wouldn’t pay off,” he said.

“To the extent that this growth is driven by capital markets, it is sustainable in the sense that the price mechanism will sort it out. But if that growth is driven by policies and subsidies, capital misallocation may occur.”
- Carlo Stagnaro, Research and Studies Director, Bruno Leoni Institute

This is where “red tape fires back against renewables,” and that shows that the lack of skilled workers is only part of the picture, according to Stagnaro. “I don’t think it is the main reason, differently from nuclear power and, to some extent, oil and gas, where skill shortage is a vivid red flag.”

Cutting-edge fields like solar photonics, offshore wind turbine design, and grid-scale battery storage are often cited as examples of skill gaps emerging in the renewables space, because at least in Europe students graduating with traditional mechanical or electrical engineering degrees often lack the specialised knowledge to fill these roles.

Stagnaro said that concern is overplayed as the “Made In” factor is set to remain the dominant factor. “The skill shortage isn’t a primary reason for the observed difficulties – at least it is not the main obstacle to the deployment of renewables. It would probably be more difficult to find skilled personnel if Europe were to manufacture these technologies, but we are currently importing most of them.”

• Lorenzo Totaro is a former Bloomberg News correspondent in London, Brussels, and Rome, and the former Communications Director for Italy at Expo 2020 Dubai. He currently advises the Italian Government and the European Institute of Innovation for Sustainability.