Green Industrial Policy - Concept, Policies, Country Experiences
72
Figure 5.1: Spectrum of Types of Disruptive Green Industrial Policy
Pollution charges, taxes, aimed at greening a targeted sector, but not at creating a new substitute sector.
Charges, or removing incentives, with revenue recycled to green sectors. Or bans/regulations with complementary policies to foster greener substitutes. But no discrimination against foreign producers. (See the Morocco case study below.)
soft disruptive GIP
Charges, removing incentives, or bans/regulations to restrict targeted sector, without complementary policies to foster the emerging substitutes. (See the Jordan case study below.)
At the left end of the spectrum, representing soft policy, exist policy options that diminish the role of undesirable activities with the explicit understanding that simply by doing so some green sectors will be enabled. An example of this type of policy is a carbon tax, which by itself would benefit a broad variety of green firms and sectors, but which attempts to neither identify particular targets for phase out, nor chart the course of the transition in the direction of particular domestic champions. Further across the spectrum would be the reduction or elimination of fossil fuel subsidies. These tend to be targeted at specific firms and sectors, and the resulting beneficiaries will
hard disruptive GIP
Charges, or removing incentives, with revenue recycled to green sectors. Or bans/regulations with complementary policies to foster greener substitutes. Discrimination aimed at fostering domestic capacity. (See the Ontario case study below.)
also be specific: for example, renewable energy generators and the related input manufacturers and services. But these beneficiaries may be domestic, or they may be foreign exporters of green goods. At the right end of the spectrum, corresponding to what we have called hard disruptive green industrial policy, are policies that combine deliberate phasing out of target sectors with deliberate cultivation of substitute domestic sectors. An example of this is the phase out of coal-fired electricity generation in Ontario, Canada and the concurrent promotion of domestic renewable energy sectors.
3. EXAMPLES OF DISRUPTIVE GREEN INDUSTRIAL POLICY This section relates four examples of disruptive green industrial policy, aiming to both illustrate the types of approaches described above, and to draw lessons from specific cases that might be useful guidance in a more general context. It covers fossil fuel subsidy reform, including brief case studies of subsidy reforms in Jordan (Box 5.1) and Morocco (Box 5.2), China’s reform of value added tax refunds to polluting and resource-intensive sectors (Box 5.3), and policies in the
Canadian province of Ontario to phase out coal and promote renewables (Box 5.4).
3.1. FOSSIL FUEL SUBSIDY REFORM Fossil fuel subsidy reform has been on the international agenda since the 2009 G20, when those countries committed to phasing out inefficient fossil fuel subsidies (G20 2009). A number of similar declarations have followed, including