Climate change negotiations and first-mover advantages: the case of the wind turbine industry

Individual EU member countries, such as Denmark and Germany, may have a rational economic interest in creating comparative advantages for renewable energy sources in order to capitalise on their first-mover advantages in these industries. We demonstrate that different means of implementing the Kyoto Agreement affect the potential to market new renewable technologies, e.g. wind turbines, to other countries subsequent to their ratification of the Kyoto target levels. This article shows that a transnationally grandfathered Tradable Permit System (TPS) renders the shadow price of emissions reductions lower in the high-cost reduction countries. Export opportunities to these countries will consequently be reduced under a transnational TPS, e.g. from the EU to the US. This could also serve to explain EU opposition to a fully flexible TPS in The Hague in 2001. Instead, the latest EU proposal delivered in Johannesburg pushed for setting a target of 15% of all energy to come from sources of renewable energy, e.g. wind turbines, solar panels, biomass and waves, by 2015. Such initiative would further EU industrial interests globally. Future research should, however, attempt to provide more empirical evidence concerning this proposition and its importance compared to other concerns.