Article Series: Renewable Power Subsidies

Green Industrial Policy

Green industrial policy is a deliberate policy-driven effort to steer the sectoral composition of a country’s economic output and growth in a direction aligned with the objectives of sustainable development. It can rely on a variety of different policy measures, many of which constitute direct or indirect subsidies. This series of studies looks at green industrial policy in the context of renewable energy sectors. Have green industrial policies met their objectives? How efficiently? What lessons have been learned?

Research Type: 

Germany's Green Industrial Policy: Stable Policies - Turbulent Markets.

This report focuses on the wind and solar PV sectors in Germany. It reviews German policy in support of raising the share of renewables in the energy mix within the context of multiple social, economic and technological objectives. Based on this analysis, the report concludes that the extent to which policies have achieved their green industrial goals at reasonable cost is mixed. Wind energy seems to perform better against all policy objectives, while the solar PV sector has come under intense pressure from international competition.

The report highlights a number of implications for future policy design. Among these are the need to adopt a systemic perspective of green industrial policy, which—in addition to better calibrating instruments like the feed-in tariff—also addresses the challenges of institutional fragmentation, interacting policy schemes and transformative alliances. Furthermore, the report emphasizes the potential offered by learning from policy practice in emerging economies.

India's Green Industrial Policy: Assessing Green Industrial Experience

This report focuses on the wind and solar PV sectors in India. It reviews the Indian policy framework for increasing the share of renewables in the energy mix within the context of multiple social, economic and technological objectives. Based on this analysis, it concludes that while support to the industry has come at a relatively low cost, development has been slow and many policies have been found wanting when evaluated against the originally proposed goals.

The report suggests that ‘green ’rather than ‘industrial’ elements have been best supported by policy to date. Impacts are most clearly seen in energy security and access, avoided health costs and the abatement of greenhouse gas emissions, while the industrial policy element has fared poorly in comparison. Marrying the two elements more completely will allow the benefits of a renewable energy manufacturing sector and environmental protection to be successfully realized.