Fighting windmills? EU industrial interests and global climate negotiations



are now drawing on experience from existing offshore wind plants and also
from the experience of other offshore industries. It should be noted that the de-
velopment of offshore wind plants has increased significantly in the last couple
of years, and the effect of this development on the learning by doing costs curve
is not (fully) captured in figure 3. If offshore based energy production turns out
to reduce production costs more than estimated in figure 3, then the likelihood
that windmills become competitive, even if a cost effective approach is chosen
to implement the Kyoto targets, is increased.

6. Conclusions

It is argued that the reason for the development of the wind turbine industry is
that wind energy has been subsidised following the first oil crisis in 1973. The
most important subsidy has been a price guarantee per produced kWh (kilowatt-
hour), which enabled the windmill industry to gain a foothold in Denmark.

Does this fit the ideas of Porter (1990) who argues that it may pay a country to
subsidise its industries for a period? Building up a strong home market will
clear the road for exports and a profitable industry in the longer run. Not neces-
sarily, since the past and current export is caused largely be subsiding windmill
production. Without subsidies, our analysis shows that implementing the
Kyoto-targets is not necessarily enough to make wind-based energy systems
competitive under free market conditions. As seen from our analysis, the poten-
tial for much larger exports can only be realised, when the Kyoto-targets are
implemented successfully, but, in particular, if not implemented in cost-
efficient way. This suggests another explanation for why the EU proposed re-
strictions on to trade in permits after the Kyoto agreement at The Hague in
2000. This could also have been in order to promote own export industry.

to reach the size of 5 MW in the beginning of the next decade, which will reduce costs of wind-
based energy production considerably (EWEA, 2002c).

28



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