Green Industrial Policy Trilogy

GREEN INDUSTRIAL POLICY & TRADE

Green Industrial Policy Trilogy

Green growth in developing countries? 11 experts explain that it's possible.

Industrialization and economic growth have contributed to higher levels of income and prosperity in many parts of the world. However, despite the progress made in reducing poverty, 10.7 per cent of the world’s population still lived on less than US$1.90 a day in 2013. Therefore, advancing economic development remains a priority for a significant number of countries. However, economic development and underlying patterns of unsustainable production and consumption are also the main cause of the current environment crisis: Environmental problems such as global warming, air pollution, loss of species, and water and soil degradation, have become a growing concern and threaten to reverse development gains, putting a disproportionate burden on the poor.

Responding to these emerging global threats entails tackling a dual challenge: pursuing economic development and wealth creation, while keeping resource consumption and pollution within planetary boundaries. This requires a structural transformation away from today’s economic development trajectory towards an economy that is low-carbon, efficient and clean in production but also inclusive by sharing benefits in an equitable manner. Green industrial policy can be a powerful means for policymakers to enable and accelerate this structural transformation.

Industrial policy refers to government actions to alter the structure of an economy, encouraging resources to move into sectors that are perceived as desirable for future development. This is the case particularly in situations where so-called ‘market failures’, or imperfect market conditions, prevent the structural changes required to shift to an inclusive green economy.

However, green industrial policy is not merely a reorientation of existing industrial policy approaches. It has a broader set of objectives and it relies on a wider set of policy instruments, including environmental and energy policies. At the heart of green industrial policy is the need to integrate different objectives, such as productivity, inclusive growth and environmental protection, through a wide set of policies capable of decoupling growth from social and environmental degradation.

Green industrial policy is therefore essential for a government’s strategy to enhance its competitiveness in the global green economy of tomorrow while safeguarding environmental resources.

To inform policymakers, researchers and practitioners about the concept of Green Industrial Policies and the instruments available, the Partnership for Action on Green Economy (PAGE) has published three reports, which can be downloaded below: “Green Industrial Policy and Trade: A Toolbox”, “Practitioner's Guide to Strategic Green Industrial Policy”, and “Green Industrial Policy: Concept, Policies, Country Experiences”.

 

THE GREEN INDUSTRIAL POLICY TRILOGY

GREEN INDUSTRIAL POLICY: CONCEPT, POLICIES, COUNTRY EXPERIENCES

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GREEN INDUSTRIAL POLICY AND TRADE: A TOOL-BOX

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PRACTITIONER'S GUIDE TO STRATEGIC GREEN INDUSTRIAL POLICY

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Practitioner's Guide
Supplement Guide
The report ‘Green Industrial Policy’ addresses policymakers, advisors, researchers and practitioners and makes a case for accelerating structural change toward a Green Economy in developing and developed countries alike. To do so, it
  • discusses the conceptual foundations of green industrial policy;
  • shows the economic and social co-benefits of a green transformation;
  • analyzes the key policies that support structural change and enhance productivity while taking social and environmental concerns into account; and
  • examines case studies from four countries at different level of income and technological capacity.
The book gives a detailed overview of different policies and instruments for green industrial policy. These include market-based mechanisms, such as environmental taxes, tradable permits, and subsidies, and regulatory instruments. The chapters on “Pricing Environmental Resources”, “Phasing Out Polluting Sectors”, “Developing Green Technologies and Phasing them in” and “Promoting Circular Economy” discuss the use of these policy instruments in detail.
The publication also provides advice on how to overcome political deadlocks that might challenge the implementation of green industrial policy: it calls for a sequenced approach and pilot-testing when introducing industrial policy, coalition building and stakeholder involvement in the transformational change, and control mechanisms to monitor and evaluate the policy implementation.

 

 

The Toolbox provides guidance for policymakers on the use of different trade policy instruments to advance green industrial policy and how to ensure that green industrial policies are aligned with a country’s obligations arising from national, regional and bilateral trade policy frameworks.
The Toolbox is therefore meant as a practical resource for policymakers and trade negotiators for using trade-related green industrial policy tools, namely:
  • trade policies that can be harnessed to promote green industries: border measures (ch.2), provisions in trade agreements reserving or promoting green industrial policy (ch.6);
  • green industrial policies that are of particular relevance from an international trade perspective: support schemes (ch.3), standards (ch.4), sustainable public procurement and manufacturing (ch. 5), employment-related schemes (ch.7).
The Toolbox can be used i) as a stand-alone resource to provide an overview over trade-related green industrial policy tools and trade obligations, and ii) to complement the Practitioners Guide.  

 

 
 
 
  
 

The Practitioner’s Guide provides practical advice on the evolving concept of Strategic Green Industrial Policy for policy practitioners. As such it describes a methodology and tools required for the planning and implementation of a green industrial policy strategy along the various stages of the policy cycle. This is founded on the understanding that any transformation of a country’s industrial sectors has to be based on a holistic and coherent strategy, aimed at an overall transformation of markets and consumer behaviour.
The guide draws on tools and methodologies from disciplines such as industrial ecology and ecological economics, with other tools rooted in systems thinking, theory of change, and other fields of research and practice. Some of these tools may be relatively under-explored territory for some industrial policymakers. And indeed, some of the changes required for a transition to a green economy imply significant restructuring (if not disruption of technological paths). However, this guide aims to ease this transition by providing detailed guidance, highlighting a number of changes that are relatively easy to implement.
The Supplement to the Guide provides a more detailed overview on the variety of policy tools that can be applied by policymakers in the respective phases of the policy circle.