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Directionality in Innovation Policy and the Ongoing Failure of Green Deals: Evidence from Biogas, Bio-ethanol, and Fossil-Free Steel

In: Questioning the Entrepreneurial State

Author

Listed:
  • Christian Sandström

    (Jönköping International Business School
    The Ratio Institute)

  • Carl Alm

    (The Ratio Institute)

Abstract

Environmental policy is no longer only about imposing regulations on industry. It is increasingly regarded as industrial policy. Both the European Union and national governments are taking more active roles in initiating green deals and various technologies aiming at 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 using hydrogen instead of coal. We argue that the presence of large public funds from different funding bodies such as the European Union, 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 the actors involved. We explain these results and draw policy conclusions concerning the risks related to green deals. Relatedly, we argue that the European Union’s current efforts in hydrogen gas face similar challenges.

Suggested Citation

  • Christian Sandström & Carl Alm, 2022. "Directionality in Innovation Policy and the Ongoing Failure of Green Deals: Evidence from Biogas, Bio-ethanol, and Fossil-Free Steel," International Studies in Entrepreneurship, in: Karl Wennberg & Christian Sandström (ed.), Questioning the Entrepreneurial State, pages 251-269, Springer.
    • Handle: RePEc:spr:inschp:978-3-030-94273-1_14
    DOI: 10.1007/978-3-030-94273-1_14
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    Citations

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    Cited by:

    1. Christian Sandström, 2022. "Mariana mazzucato, mission economy: a moonshot guide to changing capitalism. New York, NY: harper business, 2021. 272 Pages. USD 29.99 (hardcover)," Public Choice, Springer, vol. 192(3), pages 415-418, September.
    2. Björnemalm, Rickard & Sandström, Christian, 2023. "Interest groups and thefailure of transformativeinnovation policy - Insights from the ethanolcar bubble in Sweden 2003-2013," Ratio Working Papers 362, The Ratio Institute, revised 05 Sep 2022.
    3. Schou, Peter Kalum, 2024. "Unpacking the myth of the entrepreneurial state," Journal of Business Venturing Insights, Elsevier, vol. 21(C).
    4. Magnus Henrekson & Christian Sandström & Mikael Stenkula, 2024. "Seven reasons why mission‐oriented innovation policies seldom work in practice," Economic Affairs, Wiley Blackwell, vol. 44(2), pages 354-362, June.

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