Three Dimensions of Green Industrial Policy in the Context of Climate Change and Sustainable Development

Climate change has taken an increasingly important space in the development agenda. However, whether most countries can meet the challenge of mitigating climate change while simultaneously ensuring growth and poverty reduction remains debatable. This research contributes to the growing literature at the intersection of environment sustainability and economic/industrial development by identifying three dimensions of Green Industrial Policy (GIP), which rely on different approaches to mitigate climate change. Those three dimensions are (i) the consumption-centred dimension; (ii) the firm-level sustainability dimension, and (iii) the productionist innovation-driven dimension. This paper then applies this green industrial policy framework and examines the implications of pursuing different levels of GIP by drawing on a country case study (Ecuador). Two main findings arise from this study. First, a greener consumption is necessary but can hardly be achieved without industrial policies to stimulate green manufacturing and low-carbon innovation. Green industrial policy, therefore, has a central role to play in the structural transformation towards a low-carbon future. Second, a holistic and complementary approach is needed across the three dimensions of green industrial policy to ensure a coherent and developmental transition towards a low-carbon economy.