A lesson from
Denmark:
Hohe Subventionen sollten nicht nur in die Anschaffung, sondern vielmehr in die Forschung und
Entwicklung effizienter Umwelttechnologien gehen. BJ0RN LOMBORG berichtet aus Dnemark.
hiS Deeember, thc eapital of Denmark will huiI
T global politicians and negotiarors as they gather
to diseLlss the follow UD treaty co thc failcd
Kyoto Protoco1. The meeting in Copenhagen
has already become the focal poiar for those who wish
to see a "green revolution" wirh big investments in
renewable energy_ They a.I.gJ!t. rhat this could open
huge new markers. These views, not surprisingly, are
srrongly expressed by business leaders who fu:u1ff such
subsidies.
My own couarry, Denmark, is an example af the
weaknesses in this argument. Early on, it provided huge
subsidies for wind power, building thousands of in-
efficient rurbines around the country from thc 1980s
onwards. Today, it is often remarked that Denmark pro-
vides every third terrestrial wind turbine in the warld,
creariog billions in income aod jobs.
A few years aga, however, the Danish Economic
Council did a full eyaluation of the wind-turbine in-
dusrry, looking not only at its beneficial effects on jobs
and production, but also the subsidies that it reccives.
Tbe 00 effect fot Denmark was found to be a m1i1ll
cast.
The important point is that many green technologies
are not cost-effecrive, at least not yet. If they were, we
wouldn't need to subsjdizc them. The standard reply to
rhis is that green rechnologies may seem tO be more ex-
pensive, bur that the price of fQS.<;il fuels does nor inc1ude
the climate costs. Tbat makes same sense. Sinee fossil
fuels coorrjbure [0 global wanning, standard econom-
ic rheory suggesrs we should ta..x them according ro thcir
toral negative effecrs.
But this would not make green technologies more cf
ficient. It is argued that higher faxes and subsidies are
the besr way ro increase ..&I2 in new, cheaper rellew-
able energy sources. This is umrue. During [he period
16 Business Spotlight
wind energy
may not help
the economy
DU I i
of massive investment 3ssociated wirb rhe Kyma treary,
the investment of participating cOltntries in R&D as a
percenrage of .Gl2r has fallen.
lf a country invests in inefficient solar panels, mOSt of
the mOlley will go to buying the physical panels, where-
as only a very small part will go to R&D. lf countries
wall[ more R&D, they should spend direcrly on ir. This
could be a more effecrivc way of dealing wirh global
warming in {he langer ron.
Finally, Denmark is often used as an example ro show
that high carbon-dioxide taxes and subsidies for green
"The important point is
that green technologies are
not yet cost-effective"
technology will acrually do good. After all, ir is argued,
Denmark's CO! emissions have remained rhe same,
while it has enjoyed 70 per cent economic growth since
198-1. Ver, during the same period, US emissions grew
29 per cent more and GDP 39 per cent mon~ rhan Dcn-
mark's. The simple trllth is, C01 cutS and subsidies
don't nccessarily mean a standsti11 in growth, bur they
probably do mean slowet economic growth in general.
The meeting in Copenhagen in Decembcr should not
bc about blQated subsidies foe inefficienr recbnologies,
bur abour effccrive invesnnenrs in future breakthroughs.
Thar is rhc way ro deal wirh global warming and ro sup-
port a truly dynamic ccooomy. GI
BJ0RN LOMBORG is thc author of The $ceptical
Eavironmentaljst and -Cool It. He is director of the
thjok tank Copenhagen Consensus Center and
adjunct profesSQr at Copenhagen Business $chool,
4/2009