page_title: Green industrial policy
hierarchical_section_title: Green industrial policy
caption_attribution_description: English: Wind turbines, unidentified location
context_page_description: Green industrial policy is strategic government policy that attempts to accelerate the development and growth of green industries to transition towards a low-carbon economy. Green industrial policy is necessary for the reasons that green industries such as renewable energy and low-carbon public transportation infrastructure are faced with high costs and many risks in terms of market economy, and therefore, they need support from the public sector in the form of industrial policy until they become commercially viable.
  Natural scientists warn that immediate action must be taken to lower greenhouse gas emissions and mitigate the effects of climate change. Social scientists argue that the mitigation of climate change requires state intervention and governance reform. Thus, governments use GIP to address the economic, political, and environmental issues of climate change. GIP is conducive to sustainable economic, institutional, and technological transformation. It goes beyond the free market economic structure to address market failures and commitment problems that hinder sustainable investment.
context_section_description: Green industrial policy (GIP) is strategic government policy that attempts to accelerate the development and growth of green industries to transition towards a low-carbon economy. Green industrial policy is necessary for the reasons that green industries such as renewable energy and low-carbon public transportation infrastructure are faced with high costs and many risks in terms of market economy, and therefore, they need support from the public sector in the form of industrial policy until they become commercially viable.  
  Natural scientists warn that immediate action must be taken to lower greenhouse gas emissions and mitigate the effects of climate change. Social scientists argue that the mitigation of climate change requires state intervention and governance reform. Thus, governments use GIP to address the economic, political, and environmental issues of climate change. GIP is conducive to sustainable economic, institutional, and technological transformation. It goes beyond the free market economic structure to address market failures and commitment problems that hinder sustainable investment. Effective GIP builds political support for carbon regulation which is necessary to transition towards a low-carbon economy. Several governments use different types of GIP that lead to various outcomes.
  GIP and industrial policy are similar, although GIP has unique challenges and goals. GIP faces the particular challenge of reconciling economic and environmental issues. It deals with a high degree of uncertainty about green investment profitability. Furthermore, it addresses the reluctance of industry to invest in green development, and it helps current governments influence future climate policy.
  GIP offers opportunities for energy transition to renewables and a low-carbon economy. A large challenge for climate policy is a lack of industry and public support. GIP creates benefits that attract support for sustainability. It can create strategic niche management and generate a "green spiral", or a process of feedback that combines industrial interests with climate policy. GIP can protect employees in emerging and declining industries, which leads to political support for other climate policy. Carbon pricing, sustainable energy transitions, and decreases in greenhouse gas emissions have higher chances of success as political support increases.
  GIP faces many risks. Some risks include poor government choices about which industries to support; political capture of economic policy; wasted resources; ineffective action to combat climate change; poor policy design that lacks policy objectives and exit strategies; trade disputes; and coordination failure. Strategic steps can be taken to manage the risks of GIP. Some include public and private sector communication, transparency, and accountability; policy with clear objectives, evaluation techniques and exit strategies; policy learning and policy experimentation; green rent management; strong institutions; and a free press.
  Governments in various countries, states, provinces, territories, and cities use different types of green industrial policy. Distinct policy instruments lead to several outcomes. Examples include sunrise and sunset policies, subsidies, research and development, local content requirements, feed-in tariffs, tax credits, export restrictions, consumer mandates, green public procurement rules, and renewable portfolio standards.
caption: Green industrial policy seeks to address market failures and protect the environment.
exif: {}