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Working Paper

Green exports and the global product space: Prospects for EU industrial policy

We test if and where industrial policy to promote ‘green’ industry development can improve competitiveness in export markets. Proponents of ‘green growth’ have argued that domestic promotion of ‘green’ energy will generate improved comparative advantage in export markets for high-technology goods such as wind turbines or solar cells. If this holds depends on if domestic […]

By: and Date: May 21, 2011 Topic: Energy & Climate

We test if and where industrial policy to promote ‘green’ industry development can improve competitiveness in export markets. Proponents of ‘green growth’ have argued that domestic promotion of ‘green’ energy will generate improved comparative advantage in export markets for high-technology goods such as wind turbines or solar cells. If this holds depends on if domestic market expansion can, on its own, support firm competitiveness abroad.

We find evidence that industrial policy may work for wind turbines, but we find no evidence that it works for solar cells. Furthermore, domestic renewable energy promotion is more likely to translate into improved international competitiveness if a country already possesses skills, technologies, and industrial sectors closely related to the sector in question. By locating the wind turbine and solar cell sectors in the global product space of traded goods, we are able to show that, net of historical competitiveness and domestic market size, green industrial policy functions best when capitalising on pre-existing industrial capacities, rather than trying to create them.

Finally, our finding that policy appears to work for wind turbines but not solar cells may reflect the greater tradeability of solar cells, which may mean that expansion of domestic demand leads to more imports rather than expanded domestic production. While this paper suggests conditions under which green industrial policy might prove effective in economic development, it makes no claims about whether this represents an efficient approach to either growth or emissions reduction. This evidence recommends caution in using economic growth and competitiveness arguments as the primary justification for investments in renewable energy.

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Podcast

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By: The Sound of Economics Topic: Energy & Climate Date: July 10, 2019
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Policy Brief

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The new members of the European Parliament and European Commission who start their mandates in 2019 should put in place major policy elements to unleash the energy transition. It is becoming economically and technically feasible, with most of the necessary technologies now available and technology costs declining. The cost of the transition would be similar to that of maintaining the existing system, if appropriate policies and regulations are put in place.

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Opinion

Faut-il s’endetter pour le climat?

Jean Pisani-Ferry, soutient qu’il ne faut pas s’interdire de financer une partie du coût de la transition écologique par l’endettement.

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Upcoming Event

Sep
4-5
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Bruegel Annual Meetings 2019

Bruegel's 2019 Annual Meetings will be held on 4-5 September and feature the launch of Bruegel's Memos to the New European Commission.

Speakers: Lorenzo Bini Smaghi, Laurence Boone, Claire Bury, Vítor Constâncio, Zsolt Darvas, Maria Demertzis, Ottmar Edenhofer, Baroness Kishwer Falkner of Margravine, Alicia García-Herrero, Danuta Hübner, Mikaela Gavas, José Manuel González-Páramo, Mathew Heim, Yi Huang, Korbinian Ibel, Pascal Lamy, Päivi Leino-Sandberg, Ann Mettler, Ashoka Mody, Mateusz Morawiecki, Mark Leonard, Stefano Manservisi, Erik F. Nielsen, Florence Parly, Jean Pisani-Ferry, Lapo Pistelli, Lucrezia Reichlin, Joakim Reiter, André Sapir, Olaf Scholz, Sena Siaw-Boateng, Philipp Steinberg, Alexander Stubb, Ezequiel Szafir, Laura Tyson, Nicolas Véron, Reinhilde Veugelers, Sabine Weyand, Thomas Wieser, Guntram B. Wolff and Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance, Finance & Financial Regulation, Global Economics & Governance, Innovation & Competition Policy Location: Palais des Academies, Rue Ducale 1, 1000 Brussels
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Immediate action is necessary to ensure the EU can become carbon-neutral by 2050 and thus limit global warming. The rapid rise in support of this target in the last month suggests it is attainable, but the momentum must not be lost.

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Podcast

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By: The Sound of Economics Topic: Energy & Climate Date: June 6, 2019
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Book/Special report

Bruegel annual report 2018

The Bruegel annual report provides a broad overview of the organisation's work in the previous year.

By: Bruegel Topic: Energy & Climate, European Macroeconomics & Governance, Finance & Financial Regulation, Global Economics & Governance, Innovation & Competition Policy Date: May 16, 2019
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Past Event

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Through considering several different national perspectives, we discuss how to reconcile the EU Climate Strategy targets with national energy and climate policies.

Speakers: Aleksandra Gawlikowska-Fyk, Christian von Hirschhausen, Carole Mathieu and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 15, 2019
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External Publication

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This book, co-authored by Bruegel's Research Fellow Simone Tagliapietra, investigates the role of renewable energy in East Africa to provide policy-relevant inputs for the achievement of a cost-effective electrification process in the region.

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By: Michael Baltensperger Topic: Energy & Climate, Innovation & Competition Policy Date: May 13, 2019
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