BOSTON/ERFURT/BRUSSELS – As Western governments face the increasingly urgent task of accelerating the transition to a low-carbon economy, the pendulum has swung away from a heavy reliance on markets to drive innovation toward state intervention. Fearing China’s dominance in clean-tech supply chains, and recognizing the potential for job creation, the United States has put in place a wide range of industrial policies that support the development and deployment of green solutions.
For example, the US Inflation Reduction Act openly encourages reshoring by offering generous government support for firms building green-manufacturing capacity in the country. Following suit, the European Union’s Net-Zero Industry Act introduces a domestic clean-tech manufacturing target, marking a paradigm shift in Europe’s approach to economic governance.