Markets can't do it alone - we need green industrial policy

Dmitrii Vaccinium 22833
Photo by Dmitrii Vaccinium on Unsplash

Since the industrial revolution, our rapid economic growth has been achieved at the cost of serious overuse and destruction of our planet's natural resources. As we approach various ecological tipping points - some of which are already radically and irreversibly altering our environment - we know that we must pull back from the brink.

And yet, poverty and hardship are still widespread in the world, and we can't simply abandon the world's poorest and most deprived citizens. So we face a dual challenge: pursuing economic development and social improvement for the billions still living in deprivation, while rapidly reducing our material impact on the planet to ensure that these gains are sustainable for future generations.

We know that free market forces alone cannot solve these twin challenges - in fact, unfettered markets can only exacerbate some of these threats. Instead, informed and ambitious industrial strategy is required from governments and regulators, in order to channel the huge power of markets towards productive aims. 

Although "central planning" is still viewed with suspicion in some circles, all governments engage in industrial planning whether they want to or not, through subsidies, regulation, permitting and other policy instruments. Although there have been some failures - the UK government's promotion of diesel cars from the late 90's, for example - there have also been remarkable successes: the state-supported birth of world-leading renewable energy industries in Germany and the Netherlands, offshore wind in the UK, Moroccan solar investment, and most recently, China's dominance of electric vehicles and battery technology. 

These examples and many others are covered in Green Industrial Policy: Concept, Policies, Country Experiences, a new report jointly produced by the UN Environment Programme and the German Development Institute (DIE). The report highlights what countries can gain economically from pursuing environmental integrity, and explores what policy options can realistically deliver real improvements to human well-being around the world while protecting and restoring the environment. 

It provides valuable insights and background knowledge for policy-makers and academia, as well as painting a detailed picture of the state of research into green industrial policy. With case studies from China, Morocco, Brazil and Germany, the report illustrates efforts for structural change around the world. A special focus is given to developing countries, because of their need for growth and their high potential for transformation, as they are not yet locked into unsustainable pathways. 

You can read the Executive Summary of the Report here.