The Green Lantern in the Energy Sector?

Abstract: During the last decade, several influential organizations have emphasized the importance of green investments. Furthermore, many advocators have claimed that green investments would be beneficial both for the labor market but also for the economy. These statements are both misleading and hazardous since they provide a biased picture of the reality. There is no doubt that our societies need to turn more environmental friendly or “green”. However, this shift will not be costless. This thesis compares the cost effectiveness in Danish subsidies to the wind sector with investments in the oil sector. This is analyzed using economic theories such as opportunity cost and externality. The Porter Hypothesis, which argues that green regulations and subsidies leads to investments and a stronger economy, is also applied and tested. The results illustrate that green subsidies leads to more investments but unlikely to an improved economy. Furthermore, it is concluded that Danish investments in wind power are cost ineffective and that green jobs are relatively ineffective. Additionally the results show that, with a climate change adjusted cost for oil, the oil sector still remains more cost effective. This thesis argues that we need to turn our economy green but we must be willing to pay for it.