Green Industrial Policies : When and How

Green industrial policies can be defined as industrial policies with an environmental goal -- or more precisely, as sector-targeted policies that affect the economic production structure with the aim of generating environmental benefits. This paper...

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Bibliographic Details
Main Authors:	Hallegatte, Stephane, Fay, Marianne, Vogt-Schilb, Adrien
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ABATEMENT ABATEMENT COSTS ACCOUNTING ACID ACID RAIN AIRCRAFT ALLOCATION ALLOWANCE ASYMMETRIC INFORMATION ATMOSPHERE AUTOMOBILE AUTOMOBILE INDUSTRY BUS BUS PURCHASE CAPACITY CAPITAL CAPITAL MARKETS CAR CAR INDUSTRY CAR TECHNOLOGIES CARBON CARBON CAPTURE CARBON ECONOMY CARBON EMISSIONS CARBON LEAKAGE CARBON MARKETS CARBON PRICE CARBON PRICES CARBON TAX CARBON TAXES CARS CLEAN ENERGY CLIMATE CLIMATE CHANGE CLIMATE CHANGE LEVY CLIMATE CHANGE MITIGATION CLIMATE POLICIES CLIMATE POLICY CO2 COAL COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES COMPETITIVENESS CONCENTRATES CONSUMPTION COST-BENEFIT COST-BENEFIT ANALYSIS CREDIT CRITERIA DECREASE IN EMISSIONS DEMAND DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIFFUSION DISPLACED WORKERS DISTRIBUTIONAL EFFECTS DRIVERS ECOLOGICAL ECONOMICS ECONOMIC ANALYSIS ECONOMIC BENEFITS ECONOMIC GROWTH ECONOMIC IMPACTS ECONOMIC PERFORMANCE ECONOMIC POLICIES ECONOMIC RESEARCH ECONOMIC SECTORS ECONOMIC SITUATION ECONOMIC STRUCTURE ECONOMIC STRUCTURES ECONOMIC SYSTEMS ECONOMICS OF CLIMATE CHANGE ECONOMIES OF SCALE EFFICIENT VEHICLE ELECTRIC CARS ELECTRIC VEHICLES ELECTRICITY ELECTRICITY PRODUCTION ELECTRICITY SUPPLY EMISSION EMISSION ABATEMENT EMISSION REDUCTIONS EMISSION TRADING EMISSIONS EMISSIONS LEAKAGE ENERGY CONSUMPTION ENERGY ECONOMICS ENERGY EFFICIENCY ENERGY INTENSITY ENERGY POLICY ENERGY PRICE ENERGY PRICES ENERGY PRODUCTION ENERGY SUBSIDIES ENVIRONMENTAL BENEFITS ENVIRONMENTAL COSTS ENVIRONMENTAL EXTERNALITIES ENVIRONMENTAL EXTERNALITY ENVIRONMENTAL POLICIES ENVIRONMENTAL POLICY ENVIRONMENTAL REGULATION ENVIRONMENTAL REGULATIONS ENVIRONMENTAL TAX EQUITY EXCHANGE RATES EXPORTS EXTERNALITIES FINANCE FINANCIAL ASSISTANCE FIXED COSTS FOREIGN COMPETITION FOREIGN EXCHANGE FOSSIL FUEL FREE EMISSION FUEL ECONOMY FUEL EFFICIENCY FUEL PRICES FUEL SUBSIDIES FUEL TAXES FUEL TECHNOLOGIES GAS GASOLINE GASOLINE PRICE GDP GHG GLOBAL CARBON MARKET GLOBAL EMISSION GLOBAL EMISSIONS GLOBAL WARMING GNP GOODS GREENHOUSE GREENHOUSE GASES GROWTH POLICIES GROWTH RATE HIGH ENERGY HIGH-SPEED TRAIN HIGH-SPEED TRAINS HYBRID CARS IMPORTS INCENTIVES INCOME INCOME LEVELS INCREASING RETURNS INDUSTRIALIZATION INEFFICIENCY INFLUENCE INFRASTRUCTURE INFRASTRUCTURE DEVELOPMENT INNOVATION INNOVATIONS INPUTS INTEREST RATES INTERNATIONAL TRADE INVESTMENT INVESTMENTS IRON IRRADIATION JOB CREATION JOBS LABOR LABOR COSTS LABOR MARKETS LAW LEAD LESS LOW-CARBON LOWER PRICE MACROECONOMICS MARGINAL COST MARKET MARKET FAILURE MARKET FAILURES MARKETS MASS TRANSIT MODELS MONETARY FUND MONETARY TERMS MONOPOLY MONOPOLY RENTS NATIONAL TRANSPORT NEGATIVE IMPACT NEGATIVE IMPACTS NITROGEN NITROGEN OXIDES NO OIL PRICE OIL PRODUCTION OLIGOPOLY ORGANIZATIONS PATENTS PERFORMANCE STANDARDS POLICIES POLICY POLICY MAKERS POLITICAL ECONOMY POLLUTION PORTFOLIO POWER GENERATION POWER PLANTS PP PRICE PRICE CHANGE PRICE CHANGES PRICE ELASTICITY PRICES PRICING PRIVATE TRANSPORT PRODUCTION COSTS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC PARTICIPATION REAL INTEREST RATES REGULATORY CAPTURE RELATIVE PRICES RENEWABLE ENERGY RENT RENT SEEKING REVENUES RISK RISK MANAGEMENT RISKS SAFETY SAFETY NETS SCALE EFFECTS SIGNALS SILICON SOCIAL CAPITAL SOCIAL COSTS SOLAR POWER STRUCTURAL CHANGE SUBSIDY SULFUR SUPPLY SUPPLY SIDE TAXATION TEMPERATURE THEORY TRADE TRADE BARRIERS TRADE LIBERALIZATION TRADE POLICIES TRADE POLICY TRADE SYSTEM TRAINING TRANSFERS TRANSPARENCY TRANSPORT SYSTEM TRANSPORT TECHNOLOGIES TRANSPORTATION TRENDS TRUCKS TRUE UNEMPLOYMENT URBAN TRANSPORT VALUE VEHICLES WELFARE WIND WIND POWER WTO
Online Access:	http://documents.worldbank.org/curated/en/2013/10/18446583/green-industrial-policies-green-industrial-policies http://hdl.handle.net/10986/16892

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Summary:	Green industrial policies can be defined as industrial policies with an environmental goal -- or more precisely, as sector-targeted policies that affect the economic production structure with the aim of generating environmental benefits. This paper provides a framework to assess their desirability depending on the effectiveness and political acceptability of price instruments. The main messages are the following. (i) Greening growth processes to the extent and with the speed needed cannot be done without industrial policies, even if prices can be adjusted to reflect environmental objectives. (ii) "Sunrise" green industrial policies are needed because they support the development of critical new technologies and sectors, bring down costs, and allow for reduced emissions in the short term even in the absence of carbon pricing. (iii) "Sunset" green industrial policies and trade policies may be needed in conjunction with safety nets to make carbon pricing politically or socially acceptable. They can help mitigate the impact of a carbon price on competitiveness and unemployment and smooth the transition by helping industries adjust to the new conditions. (iv) Green or not, industrial policy requires carefully navigating the twin dangers of market and governance failure. The viability of supported technologies and sectors is difficult to assess through a market-test given their dependence on continued environmental policies or pricing -- such as a carbon price. Particular attention must be paid to avoid potential unintended negative effects, such as rebound effects (especially if prices are inappropriate), misallocation of capital, or capture and rent-seeking behaviors.

Green Industrial Policies : When and How

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