Published 19 November 2014

Analysis of public support schemes for environmental technology companies in Denmark and Germany

Environmental technology innovation is the key to combine economic growth and environmental improvements. The challenge is the lack of an effective market price for negative impacts on climate and the environment. For this reason, it is necessary to take supportive measures in order to encourage green structural change.

This report describes supportive measures implemented in Germany and Denmark. Both countries specialize in green technology and have initiated a number of supportive measures to encourage environmental change. Based on thorough desk-research and interviews with key actors in respective countries, this report aims to give an overall picture of the initiatives and experiences so far.

Focus is on initiatives supporting technologies and products close to the market – that is, not only research activities. There are different types of supportive measures close to the market. Some support technological development (technology push), some support the demand for products and services (market pull). The size of the initiatives varies but it is not completely clear whether bigger automatically means better. It is also a question of towards what part of the innovation chain the support is aimed. When it comes to internationalization, the support per project is often rather small in size, whereas support for the implementation of a new production model or the development of industrial symbiosis can be significantly higher.

Many initiatives in Germany have existed for a long time. This can be seen as a sign that the measures work well and that politicians have not found a need to drastically change them. The likelihood that companies are aware about the possibilities within a program is higher the longer the program has existed. Programs in Germany are often “technology open” – not only aimed at for example green technologies. This is in sharp contrast to Denmark, where support measures are often focused on particular areas such as green technologies. Germany is especially successful in creating and developing clusters between companies and also between companies and research institutions. In Denmark it is more a question of supporting the right political priorities. Political influence on the choice of markets for internationalization is much higher in Denmark.

The analysis of initiatives in Denmark showed that they often supplement each other instead of competing. Another conclusion from the interviews was that the impacts of individual programs and initiatives were assessed, but not how the program or initiative related to other programs or initiatives. Initiatives in Denmark often have a relatively short time horizon. This could contribute to a number of negative consequences for the design of the initiatives, and create uncertainty when it comes to the budgeting and implementation of projects by companies. The assessment of Germany´s initiatives with their longer time horizon is more positive in this regard.

During the interviews, the importance of the size of programs and initiatives was underlined. It was regarded as difficult, although not impossible, to assess the optimal economic size for support to companies. It was also emphasized that programs must be adapted to what they are in fact supporting, and that there is a level for the size of a program over which the effect is reduced.

Title
Analysis of public support schemes for environmental technology companies in Denmark and Germany

Serial number
PM 2014:21

Reference number
2014/095

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