Scandinavian Working Papers in Economics
Working Paper Series,
Research Institute of Industrial Economics
No 1553: The Pitfalls of Green Deals: Introduction and Synthesis
Magnus Henrekson (), Christian Sandström () and Mikael Stenkula ()
Additional contact information
Magnus Henrekson: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Christian Sandström: Linneaus University, Växjö, Sweden
Mikael Stenkula: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Abstract: Green Deals have been introduced across Western economies as large-scale, mission-oriented innovation policies (MOIPs) intended to combine economic growth with environmental sustainability. Rooted in the concept of an “entrepreneurial state,” these initiatives reflect renewed confidence in governments’ ability to direct technological and industrial transformation. However, their outcomes have frequently diverged from expectations. This volume examines the theoretical foundations and empirical results of Green Deals, highlighting the institutional, economic, and behavioral factors that contribute to their shortcomings. Drawing on perspectives from evolutionary economics, public choice theory, and behavioral political economy, the contributors analyze a wide range of cases, including Germany’s Energiewende, Italy’s Superbonus, and the European Union’s hydrogen and battery programs. Across these examples, recurring challenges such as rent-seeking, mission capture, optimism bias, and distorted incentives are identified. The findings indicate that while Green Deals have advanced ambitious sustainability goals, they often undermine competitiveness and fiscal stability while generating limited environmental benefits. The volume concludes by outlining alternative pathways that emphasize incremental, technology-neutral, and institutionally grounded approaches to sustainability—approaches that align more closely with long-term economic resilience and effective environmental policy.
Keywords: Entrepreneurship policy; Green deals; Green transition; Innovation policy; Moonshot policies; Public choice
JEL-codes: H50; L26; L52; O33; O38; P16
Language: English
33 pages, February 25, 2026
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