235The Failures of the Entrepreneurial State: Subsidies to Renewable Energies. . .
the following (and as chapter “Less from More: China Built Wind Power, but Gained Little Electricity” shows concerning China) (Grafström, 2022). The stated objective of Europe’s green policy is to achieve global leadership in clean technologies, as Mazzucato suggests. This goes well beyond what a textbook-like environmental policy would look like: In fact, the latter would rely on carbon pricing to minimize the use of fossil and other polluting fuels, rather than employing subsidies and regulations aimed at maximizing the production of clean energy from selected technologies. It also goes beyond the mere and reasonable attempt to design environmental policy in a way that induces innovation. It reduces social costs (Porter & Van der Linde, 1995), rather than hampering European businesses’ competitiveness and unintentionally accelerating the process of deindustrialization of the Old Continent. If one takes the aims of green policies at face value, subsidies to the production of clean energies delivered: the joint amount of wind and solar capacity in the European Union grew from 12.5 GW (or 2% of total installed electricity capacity) in 2000 to 261.2 GW in 2018 (or 28.1% of total installed electricity capacity) (EC, 2020b). However, did it work? Was it the best way to meet the climate goals? This chapter focuses on the experience of green subsidies.1 Moreover, it tries to answer the following questions: • Was the support of renewable generators a cost-effective environmental policy? • Did it work? Did Europe become a global powerhouse for renewable technolo-
gies manufacturing? • Did European consumers and businesses benefit, on balance, from the push
toward renewable energies? The chapter is structured as follows. Section 2 after this introduction shows the progress in the penetration of Renewable Energy Source in Electricity (RES-E) and their direct and indirect costs, along with environmental benefits. Section 3 answers the first research question, i.e., whether—by subsidizing the deployment of renewable energies—the European Union was able to cost-effectively cut carbon emissions. Section 4 addresses the subsidization of green energies as a form of industrial policy. Section 5 addresses the social dimension of the policy, i.e., whether it promoted economic growth and fairness. Section 6 shows how the green entrepreneurial state is turning into a green central banker and discusses the underlying risks. Section 7 summarizes and concludes.
1Henceforth, when we speak about subsidies, green subsidies, renewable subsidies, and other similar expressions, we specifically refer to subsidies to the production of energy, unless otherwise specified.
236C. Amenta and C. Stagnaro
Renewable capacity in the EU27
450 35 GW 400 30 350 25 % generaon 300 20 250 200 15 150 10 100 5 50 0 0
Hydro Wind Solar PV RES Share of Generaon
Fig. 1 Installed Generation Capacity From Hydro, Solar, and Wind (left axis) and RES-E Generation as a Share of Total Generation in the E.U.27 (right axis). Source: Author’s elaboration on data from Eurostat