Sustainable Recovery

World Energy Outlook Special Report
River running through a forest


Due to Covid-19 lockdowns, global private car use in April 2020 was around 40% lower than in previous months (IEA, 2020e). Car sales have also been affected, with a 30% year-on-year drop in sales in first-quarter 2020. We estimate that around 2 million jobs in the automotive industry are at risk globally, representing around 15% of the manufacturing workforce in this sector. The aviation, high-speed rail and public transport sectors also have been hit hard by Covid-19, with air travel demand1 expected to be around 50% lower in 2020 than in 2019 (Peace, 2020). Many governments are now looking to support the transport sector to preserve employment and ensure the continuity of transport services, while also improving resilience and sustainability.

We focus in this section on three specific areas: encouraging consumer purchase of more efficient new vehicles, urban infrastructure and high-speed rail.

Employment multipliers for investment in the transport sector


New vehicles: The automotive sector directly employs around 11 million workers globally and supports a further 4 million indirect jobs (for parts manufacturing).2 Car sales are expected to fall globally by around 15% in 2020 and commercial vehicles production by 22% (IHS, 2020a). Consumer incentives for the replacement of old, inefficient vehicles by new, more energy efficient ones are a way of sustaining production facilities. For commercial vehicles such as trucks, support could take the form of improved financing or tax reductions for low-emission vehicles. In addition to job retention, these incentive schemes can enhance energy security through reduced oil consumption, and, if designed appropriately, can reduce air pollution and GHG emissions. Boosting demand for electric vehicles, including fuel cell vehicles, would incentivise automakers to shift towards lower emission models and to pursue cost reductions in battery and fuel cell manufacturing: it could also lead to jobs in new domestic industries such as battery production.

Expand high-speed rail networks: The high-speed rail industry directly employs 420 000 people in operation and management jobs today, and the construction of projects supports around 2.6 million construction and engineering jobs. Government support to this sector to ensure the completion of announced projects would help to protect these jobs and could create an additional 220 000 jobs in O&M. Railways can support territorial cohesion and spatially balanced and decentralised economic development. Rail travel is also the most efficient transport mode for journeys under 800 km (IEA, 2019d), requiring on average 12-times less energy per passenger kilometre than airplanes and road vehicles.

Improve urban infrastructure: Walking and cycling has significantly increased since the outbreak of Covid-19, and many cities have reallocated road space to pedestrians and cyclists. However the use of public transport in cities worldwide has fallen by 50-90%, with billions of dollars of revenue losses for operators (Moovit, 2020). Globally, the public transport sector employs about 13 million people and plays an important role in ensuring accessibility for citizens in many cities (UITP, 2011). Without government assistance, there is a risk that jobs could be lost, operations curtailed and prices raised. Any resulting modal shift to cars would increase GHG and air pollutant emissions as well as congestion levels. Investment in public transport systems, including the electrification of city bus systems, would create around 30% more construction and engineering jobs than a similar level of investment in roads (Smart Growth America, 2011). Public health fears could be addressed by investing in heightened cleaning practices on public transport and by appropriate social distancing measures. 

New vehicles

Passenger car sales grew by just under 5% every year on average over the past decade. The Covid-19 crisis is bringing this period of sustained growth to an abrupt halt: we expect global car sales in 2020 to fall by around 15% from 2019 levels. Meanwhile the commercial vehicles market is expected to decline globally by 22% in 2020 (IHS, 2020a). In the European Union, demand for new trucks decreased by 35% during the first four months of 2020 (ACEA, 2020a). The automotive industry globally employs around 14 million workers in vehicle manufacturing. We estimate that around 2 million jobs are now at risk globally due to the declining demand for new vehicles.

After the 2008-09 global economic crisis, several countries introduced vehicle scrappage programmes as part of efforts to support domestic automotive industries. For example, the United States established a cash-for-clunkers scheme in 2009 that is estimated to have led to additional sales of 440 000 - 600 000 new cars (US GAO, 2010): nearly half of the vehicles sold were manufactured in the United States, creating or retaining 40 000 ‑ 120 000 local jobs during the period of the scheme (Romer and Carroll, 2009). By incorporating fuel efficiency and GHG emissions standards as well as lifecycle impact considerations in programme design, scrappage programmes can incentivise consumers and companies to replace their old, less efficient, vehicles with more efficient alternatives such as hybrids, plug-in hybrids, battery electric and fuel cell vehicles. Where schemes involve the trade-in of an old car, enabling people to trade their cars for alternative forms of transport, such as bikes, e-bikes, e-cargo bikes or public transport passes, can help to boost cycling and public transport, and to reduce emissions. Similar scrappage programmes targeting other vehicle types such as two/three- wheelers, taxis, buses and light trucks could also contribute to job retention, fleet modernisation and emissions reductions. For example, China has announced direct and indirect incentives for reviving the trucks market and has extended subsidies for electric vehicles until 2022 (IHS, 2020a). 

Passenger car sales by key region, 2010-2020e


The employment implications of vehicle scrappage schemes depend upon the job intensity and the geographical distribution of a country’s car manufacturing industry. Scrappage schemes create direct manufacturing jobs by increasing new car sales: they also create jobs in car disassembly and metal recycling, as well as programme administration.

Direct manufacturing jobs in the automotive sector in key producer regions


Car production in 2019

Jobs in 2019

Jobs at risk*









United States




Southeast Asia




Other regions




Latin America













*Estimate based on declines in passenger car sales expected in 2020.

Tying the size of subsidies for new car purchases to fuel efficiency and GHG emission standards can improve the overall efficiency of the car fleet. More efficient ICEs and hybrids do not require a significant change in the automotive value chain and associated skills. However, electric engines have around 200 components, as opposed to 1 400 components in internal combustion engines (FES, 2015). As a result, electric vehicle (EV) manufacturing reduces the need for upstream parts manufacturing and assembly labour: at the same time it creates local jobs downstream in the installation and O&M of charging points (AIE, 2018).

Excluding job creation connected with charging infrastructure and battery manufacturing, plug-in hybrid electric cars create an additional 6 000 jobs for every 1 million cars sold compared to a gasoline car (ICE), whereas battery electric cars create 20 000 fewer jobs (Wietschel et al., 2017). The difference in manufacturing jobs created between ICEs and electric cars is however more than offset if batteries are produced domestically. Current battery production for EVs is geographically concentrated, with China accounting for more than 70% of global battery capacity (Benchmark Minerals, 2020). While manufacturing costs may substantially differ across regions, a more regionally diffuse battery value chain could offer more resilience.

Scrappage schemes can be rolled out relatively quickly, helping retain jobs in the short term and clearing vehicle stocks accumulated during lockdown periods: however, their effect might only be temporary, serving to bring forward future vehicle sales. While these schemes can reduce transport GHG emissions by incentivising electrification, they are less cost effective than carbon pricing. As such, their implementation should be time-limited and paired with long-term strategies to address the multiple challenges faced by the automotive sector, which include electrification, workforce re-training and the need to adjust to a potential structural reduction in demand in certain regions, if teleworking patterns persist.

Scrappage schemes involving unconditional rebates might lead to most of the subsidies going to high-income households retaining the budget capacity to buy a new car during an economic downturn. Tying rebate eligibility to income criteria, as in France’s recently revised scrappage scheme, could help to prevent this. 

Over one-third of the global car fleet is more than ten years old. Replacing a ten-year old gasoline car with a new same class hybrid car would result in a 40% reduction in lifecycle CO2 emissions in most regions. The lifetime emissions savings of replacing a ten-year old ICE car with a battery electric vehicle (BEV) depend on the emissions intensity of electricity generation. Based on today’s electricity mix, emissions from a BEV would be 80% lower than an ICE vehicle in the European Union, 60% lower in the United States and around 40% lower in China. Emissions savings are likely to increase in the future as power sectors decarbonise. Shifting to the most fuel efficient gasoline cars could also reduce nitrogen oxide (NOX) emissions by 14%, while shifting to BEVs would eliminate NOX emissions almost entirely (Bieker and Mock, 2020; EEA, 2018).

Fuel efficient and electric cars can be cost-effective purchases for consumers. At an oil price of $60/barrel, hybrid cars have a payback period of around six years,3 during which the higher upfront cost is paid back in the form of lower operating costs relative to an average gasoline car. This translates to a range of abatement costs from minus $110 per tonne of carbon dioxide (tCO2) to plus $15/tCO2 (figures below) depending on fuel taxes, mileage driven, and other regional circumstances. For electric cars, the payback period is around eight years. However, battery costs have declined by around 70% over the last five years and are expected to continue to fall; this will shorten payback period further in the years to come. If the oil price levels were to be around $30/barrel, this would add two-three years to the payback period of both hybrids and EVs. Two/three-wheelers have high potential for electrification, especially in developing Asia, while placing minimal pressure on electricity grids, delivering substantial benefits in terms of air pollution and noise reduction, and having lower material requirements for batteries than EVs. The payback period for electric two/three-wheelers is around three-four years in most countries.

The electrification of bus fleets could contribute significantly to mitigating air pollution in urban areas. Creating low-emission zones in city centres also has benefits for air pollution arising from transport.

Abatement costs for road vehicles


Payback periods for road vehicles


Long-distance rail transport has been severely affected by recent mobility restrictions: demand in first-quarter 2020 fell by more than 80% from levels in 2019 (WSDOT, 2020; Boursier, 2020). Demand for rail travel is expected to remain low even after travel restrictions are lifted because of reduced customer spending and continuing health concerns. The aviation industry has also been severely impacted by lockdown measures and the fallout from Covid-19. Some governments have started to support the aviation sector by providing financial relief packages to try to limit job losses: a co-ordinated approach would also consider investment into alternatives modes of transport such as high-speed rail (HSR).

Before the crisis, major rail companies employed around 3 million people in operation and management jobs and operated more than 360 000 km of rail network (Railway Technology, 2018). There are around 60 000 km of HSR in operation today, and around 32 000 km HSR lines are under construction or planned around the world. Many of the projects under construction are heavily reliant on public support and, with the economic downturn and pressure on public budgets, there is a risk that this could be reduced. Stabilising these projects would prevent job losses, while accelerating plans for new HSR lines would spur new employment and could, if well prepared and executed, provide long-term economic and environmental benefits.

High-speed rail networks around the world, 2020


The high-speed rail industry is likely to require some short-term financial aid to limit job losses from operators and to maintain the development of new projects. In 2019, 60 000 km of operational HSR projects across the world employed over 420 000 people in operations and management jobs, while HSR construction projects currently support around 2.6 million construction jobs globally. The majority of existing HSR lines and those under construction are in China, Europe and Japan, but a number of regions such as the Middle East, India, Africa and the United States are currently building their first lines. Besides protecting the loss of these construction jobs, the completion of all projects that are currently underway would generate around 220 000 jobs in operations and management.

Looking beyond the projects under construction, financial support to plan and promote new projects would also create additional jobs in manufacturing, although these may be largely limited to countries with existing manufacturing bases such as China and Japan unless new local supply chains are also developed. Promoting high-speed rail could also create domestic jobs in the power sector by increasing electricity demand.

Previous IEA reports have shown that around 20% of domestic flights in North America, 10% of flights in Europe and almost 8% of flights in Asia-Pacific could be displaced by high-speed rail (IEA, 2019d). An estimated 18 grammes of CO2-eq would be saved for every passenger kilometre travelled by high-speed rail rather than by air.

High-speed rail, on average, is at least 12-times more energy efficient than air and road travel per passenger kilometre. Investment in HSR could therefore strengthen energy security and resilience of oil importing countries, as well as reduce emissions. We estimate that, if the share of rail passenger activity were to increase by 60% above current levels, it would avoid around 200 million tonnes of oil equivalent (Mtoe) in energy demand by 2030. Most of this would take the form of a reduction in the demand for oil of around 4 million barrels per day (mb/d). Conversely, a modal shift from railways to road transport could lead to an increase of up to 8 mb/d in oil consumption (IEA, 2019d).

Improve urban infrastructure

The lockdown measures brought about by the Covid-19 pandemic have led to large-scale reductions in urban transport activity: the number of trips in most cities has reduced by more than 50% (Citymapper, 2020). Even after lockdown measures are relaxed, use of urban public transport may remain low due to social distancing needs and passengers’ health concerns. In contrast, cycling and walking, are increasing, as is car travel. Several cities are looking at improving infrastructure to promote walking and cycling, with the aim of creating job opportunities while improving air quality and health and wellbeing of citizens: investment in public transport and in charging infrastructure for electric vehicles and electric buses offers a complementary way to achieve those objectives.

The provision and availability of recharging infrastructure for EVs and electrified ride sharing services (e.g. e-bikes, scooters, e-buses) plays a key role in the uptake of electro-mobility. Globally, there were nearly 1 million public recharging points in 2019, a 60% increase compared with 2018 (IEA, 2020e). There is a strong correlation between the availability of charging infrastructure and the size of the EV fleet. More extensive charging infrastructure therefore will be required within cities as the use of EVs and other forms of electric mobility increases. The installation and manufacturing of electric charging points supports over 12 jobs per million dollars of investment.

Public charging points in key markets, 2014-2019


Global electric cars in key markets, 2014-2019


Electric buses offer an efficient and flexible form of public transport. Around 95% of global electric buses today operate in China (IEA, 2020f). China recently announced the extension of subsidy schemes for supporting electric buses to 2022 and plans to construct additional charging stations to support public transport electrification (MIIT, 2020). In the European Union, around 1 600 new electric buses were sold in 2019, implying a market share of only 4% (ACEA, 2020b). The average payback period of an electric bus is 9-11 years (based on an oil price of $30-60/barrel) and abatement costs range from $10-250/tCO2.4 Battery costs are expected to continue to fall, shortening the average payback period. Additional investments in electro-mobility infrastructure would further accelerate the electrification of the bus fleet.

A rapid adoption of electric trucks and vans would cut CO2 emissions and local air pollution. A growing number of countries and regions are introducing policies for electric trucks, including India, European Union, China and Latin America. More than 6 000 battery electric trucks were sold in China in 2019 and around 750 new electric trucks were registered in Europe in 2019. Many major postal and package delivery companies have also pledged to expand their electric fleets: Amazon has pledged to have 100 000 electric delivery vans on the road by 2024, and DHL has committed to operating 70% of first- and last-mile delivery services with clean transport modes by 2025 (IEA, 2020f).

Public transport allows efficient and affordable travel for all, and has been especially important during the Covid-19 crisis for transporting essential workers. Public transport systems, which employ 13 million globally, are under substantial duress because of Covid‑19 (UITP, 2011). In Europe alone, a drop in revenue of around 40 billion dollars is expected in 2020 (IRJ, 2020).

Public transport has an important role to play in ensuring equal access to employment and education, and is an energy efficient means of transport. It provides important job creation opportunities: constructing new public transport lines can produce around 30% more jobs per dollar than investment in roads. Spending on transport projects in the American Recovery and Reinvestment Act of 2009 is estimated to have produced around 2.5 jobs per million dollars of investment (Smart Growth America, 2011).

Globally, over 8 000 km of metro and light rail have been commissioned and/or are under construction, and around the same amount is at an early planning stage. The estimated investment needed for these schemes at the early planning stage is over $350 billion, of which 60% is in low- and medium-income economies (UIC, 2017). This would create around 5 million jobs. Road space reallocation efforts could also bring “Bus-Rapid Transit” systems into cities that do not have them, which are less capital intensive than metros and have shorter construction periods (Loo, 2018). 

In regions that have eased their lockdowns, use of public transport has remained 50% lower than normal, while walking and biking levels have increased. Cities in the United States, including Chicago and Philadelphia, saw use of their bicycle share programmes nearly double during March 2020, while a number of European countries have seen an increase in bicycle count trends.

To maintain social distancing and avoid the negative impacts of increased car use, a number of cities – including Milan, Paris, Bogota and San Francisco – have reallocated road space to allow for increased walking and cycling. Making road space reallocation permanent by building bike lanes and expanded walkways could create over half a million local jobs globally in construction in the immediate to near term. The level of investment required is on the order of $40 billion. Additional jobs would be created through bicycle sales, repair and tourism, and could result in around 10 million new jobs across the manufacturing and retail sectors.

Increase in weekday bicycle activity in selected countries compared with pre-lockdown periods


Cities are also facilitating cycle use through incentives to repair existing bicycles and to purchase new ones. This has increased levels of local shopping: for example, establishing cycle paths in Manhattan, New York, was shown to increase local trade by up to 50% (Raje and Saffrey, 2016).

Payback periods for consumer purchase are typically less than six months for bicycles and up to two years for e-bikes. Abatement costs for investment in walking and cycling infrastructure are typically negative: estimates vary depending on emission factors of the modes they replace, the extent to which modal shift is from car or public transport, and the potential for induced travel. We estimate the abatement cost to be minus $100-50/tCO2.

Active travel also provides a range of health and societal benefits. One study indicated that for each dollar invested, the social benefits are over five-times higher (UK Department of Transport, 2014). Replacing the use of private vehicles with walking, cycling or public transport use brings air quality and noise reduction benefits and reduces congestion: this is particularly beneficial in cities with high pollution levels.

  1. Air travel demand is expressed in revenue passenger kilometres (RPK).

  2. Indirect jobs include suppliers that produce parts exclusively for automobiles and would not see job creation due to purchases made in other industries.

  3. The payback period is the time needed for savings in running costs (i.e. fuel and maintenance costs) to outweigh higher upfront costs compared to a conventional vehicle (i.e. gasoline car).

  4.  Compared with a diesel bus, including tank-to-wheel emissions and indirect emissions from the power sector.

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