The climate crisis won't be solved by tinkering with markets

It's time for a more progressive approach to green industrial policy

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I recently developed a new approach to green industrial policy together with Jason Hickel. Our framework has now been published as a research article, entitled “A progressive framework for green industrial policy”, in the journal New Political Economy. It is the very first policy framework to explicitly outline how to scale down harmful industries, organise production around public benefit, and achieve global ecological justice.

Our motivation for developing this framework was that current approaches to green industrial policy are failing to address unsustainable growth in energy and resource use, especially in high-income countries. Consider this shocking fact: in high-income countries, resource use exceeds sustainable guardrails by a factor of four and they are responsible for around 90 per cent of global carbon emissions in excess of the safe planetary boundary. While many high-income countries are making efforts to decarbonise, it’s not happening fast enough. At existing rates of carbon mitigation, high-income countries will take on average more than 200 years to decarbonise fully. Meeting the targets of the Paris Agreement — a legally binding international treaty on climate change which aims to limit global warming to well below 2°C above pre-industrial levels — is a distant pipe dream unless wealthy nations radically change course.

We clearly need a new approach to green industrial policy. In developing our framework, although we took inspiration from existing approaches, we most importantly incorporated new insights from ecological economics, post-growth, and degrowth — much-needed insights that challenge the conventional approach of ever-increasing production and consumption.

Source: Hauge, J. and Hickel. J. (2025). A progressive framework for green industrial policy. New Political Economy.

Our framework has three pillars: (1) scale down ecologically harmful industries and sectors to directly reduce energy and resource use; (2) organise production more around public benefit, with greater democratic control and guidance over investment and production; and (3) work towards global ecological justice and enable greater ‘ecological policy space’ for the global South to pursue industrial development. The framework shows how productive capacity can be liberated and redirected towards more socially and environmentally beneficial ends, while also democratising control over the economy. Let me briefly outline each pillar.

Pillar 1: Scale down ecologically harmful industries. This pillar emphasises the need to reduce production in sectors that are energy-intensive, resource-heavy, and socially unnecessary — for example, fossil fuels, industrial beef, fast fashion, and luxury goods. The goal is to directly reduce energy and material use while freeing up productive resources for socially and environmentally beneficial purposes. Tools include credit policy to restrict lending to harmful industries, consumer protection laws like ‘right to repair’, and targeted taxation on luxury and polluting products. This pillar repositions industrial policy to actively manage economic contraction in ecologically damaging areas, while remobilising and liberating resources towards a just and green transition.

Pillar 2: Organise production more around public benefit. The second pillar argues that production should be reorganised to prioritise public good over private profit. In the current system, the for-profit private sector largely controls investment and production, leading to overproduction of harmful goods and underproduction of socially necessary ones. Public financial instruments — such as state-led credit guidance and public investment — are key to ensuring that essential services like public transit, housing, and renewable energy are adequately provisioned. This pillar calls for stronger coordination across state policy levers and increased democratic control over economic planning, enabling societies to redirect efforts towards equitable and sustainable production.

Pillar 3: Global ecological justice. The final pillar addresses international inequality and the need for differentiated ecological responsibilities. High-income countries are primarily responsible for ecological breakdown and must reduce their resource and energy use. In contrast, lower-income countries require increased ‘ecological policy space’ to develop their economies and meet human needs. This entails allowing the Global South greater freedom to formulate industrial policy, receiving reparations or climate-related compensation from the North, and participating in a fairer global governance structure. Ultimately, this pillar promotes a just transition that empowers the South while holding the North accountable for historical and ongoing ecological exploitation.

Although our framework calls for systemic transformation, the policy pathways are not simply thought experiments. They build on real-world implementation, both at present and historically, including carbon taxes, credit guidance, competition law, consumer protection laws, and public ownership structures.

But we do indeed question the status quo of the capitalist economic system more fundamentally than existing frameworks for green industrial policy. Our argument is that the scale and urgency of ecological breakdown demand more than incremental or market-led fixes. We need a fundamental transformation. Encouragingly, this perspective is not fringe. As we highlight with reference to several studies in our paper, a growing majority of climate scientists and members of the public support post-growth positions and believe that socially unnecessary production and consumption pose a significant threat to our planet and society. For example, a consumer study found that 70 per cent of people in 20 high-income and middle-income countries support the statement that “overconsumption is putting our planet and society at risk”.

Yet we recognise that strong public support alone will not be enough. The interests of powerful elites who benefit from the status quo will likely resist the kinds of changes we advocate. To overcome this, we argue that what’s needed is not just protest or symbolic politics, but the rise of mass-based political movements and parties capable of taking power and implementing these policies. History shows that transformative change often seems unrealistic — until it is achieved. Like past struggles for universal suffrage, civil rights, and the end of apartheid, systemic change is possible when rooted in collective action.