Why Green deals may fail – evidence from biogas, bio-ethanol and “fossil free” steel

Christian Sandström () and Carl Alm ()
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Christian Sandström: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden, https://ratio.se/
Carl Alm: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden, https://ratio.se/

No 365, Ratio Working Papers from The Ratio Institute

Abstract: Environmental policy is no longer about imposing regulations on industry but is increasingly regarded as industrial policy. Both the EU and national governments are taking more active roles in initiating “green deals” and various technologies aimed to result in sustainable development. In this chapter we describe and discuss some recent experiences of green innovation policies. Historical examples concerning efforts in both biogas and ethanol are combined with a more contemporary description of “fossil free” steel, i.e. steel made by using hydrogen instead of coal. We argue that the presence of large public funds from different funding bodies such as the EU, various government agencies and municipalities has distorted incentives, making it rational for firms to pursue technologies without long term potential. The result has been an absence of sustainable development, mounting debt and financial problems for those actors that have been involved. We explain these results and draw policy conclusions concerning the risks related to green deals. Relatedly, we argue that the EU’s current efforts into hydrogen gas face similar challenges.

Keywords: Green deal; biogas; policy failure; entreprenörsstat; riktning (search for similar items in EconPapers)
JEL-codes: O25 O31 O38 O44 Q42 Q55 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2023-06-13
New Economics Papers: this item is included in nep-ene, nep-env and nep-ino
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