Fighting windmills? EU industrial interests and global climate negotiations

hope for future exports. Still, the ability of the state to pick the future winners in
the market can be questioned. First, it could simply be a lucky punch as no one
knew back in the 1970s that the greenhouse effect would be taken seriously a
couple of decades later. Furthermore, a new report by the Danish Economic
Council (2002) has questioned the profitability of the Danish wind turbine sec-
tor so far. It argues in detail that the investments undertaken by the Danish state
have not paid off yet.

Let a country (or a firm in that country) develop a new technology for reducing
emissions. Whether or not export opportunities exist for this technology de-
pends on three main factors. Firstly, the installation and operation costs of the
new technology are competitive compared to existing technologies. Secondly,
the relative emission reduction from this new technology compared to existing
technologies also increases the competitiveness of the new technology. Thirdly,
the level of emissions reduction in the countries that import the new technology
is decisive when considering the level or reduction and the type of instruments
used to achieve the emission targets in question. Consequently, the cheaper the
installation and operation costs, the higher the reduction targets and the higher
the reduction that the new technology enables, the more likely it is that the new
technology can be exported.

It is possible to identify two different types of first mover advantages. The first
type results when the gain from the achieved technological progress only mate-
rializes in exports to countries engaging in serious reductions of emissions
(such that relative prices in those countries change in favour of the new tech-
nologies). The second type of first mover advantages exists, when it is possible
to develop new technologies that are competitive even in situations where coun-
tries do not have reduction targets for the relevant pollutant. A consequence of
this second type is that they in themselves trigger reductions in other countries.

The windmill industry provides an example of the two different types of first
mover advantages. As long as the price of energy remains between the prices of
conventional energy supply with and without pollution control costs, the first

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