Europe's rush to go green might be destroying the very factories we need to survive climate change.
April 15, 2026
Original Paper
The Green Dutch Disease: Why a Non-Pivotal Player Should Not Mitigate Alone
SSRN · 6422538
The Takeaway
We’re told that aggressive environmental regulations are the only way to save the planet, but they might be creating a 'Green Dutch Disease.' EU policies are inadvertently killing off local heavy industry like steel and cement by making them too expensive to run. The irony is that we need massive amounts of steel and cement to build the sea walls, wind turbines, and resilient infrastructure required for adaptation. By offshoring these industries to improve carbon statistics, we are losing the physical capacity to build a climate-ready world. It’s like selling your hammer to pay for the blueprints of a new house.
From the abstract
We model international climate policy as an asymmetric coordination game. The EU, with ∼6% of global emissions, is non-pivotal: its unilateral mitigation changes the climate outcome by order ε ≈ 0.07. We identify a channel absent from existing models-a Green Dutch Disease in which climate regulation acts as a self-inflicted booming-sector shock in the Corden-Neary framework. The "booming sector" (clean economy) crowds out energy-intensive manufacturing through energy cost appreciation, but unlik