Denmark is a pioneer of clean technology. For example, the country generated 22% of its electricity from wind power last year (more than any other nation) and plans to achieve zero fossil fuel consumption by 2050. Based on my visit here, I believe there are three cultural reasons that Denmark is a leader in clean tech: 1) a largely homogenous population, 2) the Jante law, and 3) a high tolerance of taxes on traditional energy products.
98% of Denmark’s population is Christian. Denmark has a very equitable family income distribution, ranking in the 88% percent of all nations as measured by the Gini Index. Similarly, Danes pay some of the highest income taxes in the world, with marginal income tax rates exceeding 60% for top earners. When I spoke with a SVP of a multinational corporation on this topic, he said that of course he would prefer to pay lower taxes, but that he was unwilling to forego any of the social services provided by the state. A journalist I spoke with proudly framed Denmark’s policy as one of the greatest investment in social welfare per capita in the world.
Of course I had to ask them about freeloaders and brought up the American political character of the “welfare queen.” The Danes I spoke with felt that, although their social security net was exceedingly generous, it was fair given their fellow countrymen were the beneficiaries. In America, where we have so many different communities, it is more difficult to establish a robust social welfare program. However, the Danish model is not without drawbacks – they have very strict immigration policies that prevent immigrants from naturalizing, thereby preserving their relatively homogeneous ethnic demographics.
Danish children are taught ten social commandments (the Jante Law) in school. Generally, these laws emphasize the collective good and discourage individuality. For example, the first of ten laws states, “Do not think that you are anything special.” The remaining laws go on to prescribe measures that will preserve social stability and uniformity. As a result of these commandments, Danes are generally personally humble, and community oriented.
Thus, when a developer plans a wind turbine or park, it is required to offer a 30% stake in the facility to the local community. Because these personal investments generate an attractive ROI, the social commandments contribute to overcoming the not-in-my-backyard phenomenon. The social commandments also contribute to pro-social behavior such as an aggressive recycling program in Copenhagen. Here families sort their recyclables out of a sense of responsibility to the community, while in other countries, fines are necessary to ensure compliance with recyclable sorting schemes.
Denmark has substantial policies to discourage consumption of fossil fuels and encourage renewable technologies. Retail gasoline costs $8 per gallon. There is a 180% marginal tax on internal combustion engine powered cars, while electric vehicles are not taxed. Drivers of electric vehicles can park for free in the city center, drive in the bus lane, charge vehicles for free, and do not pay tolls. In the electric sector, there are large feed-in-tariffs to provide certain return on investment to wind park developers and encourage development. Denmark exports half of the natural gas it produces and consumes the rest, importing none. They are also planning for dramatically declining production in the coming decades.
All of these factors make it relatively easy for Denmark to adopt a carbon tax in comparison to most other nations. In effect, they could shift their market interventions away from the current structure and towards a carbon tax, whereas America, for example, would need to take more drastic measures to implement a carbon tax. Surprisingly to me, I learned that many Danes actually expected an international consensus at the UN Climate Change Conference of 2009 (hosted in Copenhagen) on the price of a carbon tax. While many Americans hoped for such a policy, very few of us actually expected an accord. This difference in expectations exemplifies the differences in pre-existing regulations and mindsets between Denmark and America.
American culture differs so dramatically from Danish culture that we will need to rely on other means to drive adoption of clean technology. We have a multi-cultural society that holds sacrosanct the American dream of an individual obtaining great riches. Furthermore, we have a relatively weak tradition of resource conservation, preferring instead a frontier spirit that embraces manifest destiny. Thus, I believe that clean technology innovations in America will need to be commercially viable without generous subsidies initially.