Bureaucrats Entangled in Economics? Making Industrial Policy for Danish Power-to-X

Power-to-X is an economy of wind, sun, water, pipelines, powerlines, land, and large machines - and an economy which asks for significant state intervention, support, and risk-taking. In economic terms the tenets of orthodox neoclassical economics are severely challenged and what we could call industrial policy is returning to the spotlight.

In Denmark, PtX has rapidly risen to prominence in the national energy future. PtX is supporting the electrification of the energy system while substituting fossil fuels where electricity is impractical. Perhaps more importantly, PtX is seen across many actors in the Danish industry as a promising new industrial venture, that - while helping the state in reaching its carbon reduction commitments - will generate jobs and export of products and technologies. A 2021 government strategy highlights these opportunities as a win-win for the national economy while pointing out that PtX, while expected to eventually be able to operate under market conditions, needs funding, better framework conditions, regulation, R&D, and additional infrastructure to take off.

In this paper, we study how civil servants in the Danish Energy Agency, as the midwifes of new policies and regulation, relate to the tension between commitments to efficient allocation (and minimal intervention) on one hand, and the on the other, the strong political push towards promoting and paving the way for specific technologies to succeed. Doing so we contribute with an account from bureaucratic practice of how an economy and its practical understandings/economics are mobilized in times of energy transition.