The sunshine problem: Climate change and managed decline in the European Union

Timur Ergen and Luuk Schmitz

No 23/6, MPIfG Discussion Paper from Max Planck Institute for the Study of Societies

Abstract: Decarbonization requires the winding down of - economically - fully viable, if not highly prosperous, lines of economic activity. Different from past episodes of industrial restructuring revolving around the managed decline of sunset industries, accelerating climate change requires reallocation away from economic activities where the metaphorical sun is still shining. Firms, owners, workers, regions, and polities structurally rely on these sources of prosperity and have interwoven their past and future lives with them. We argue that this problem has created a space for state actors to experiment with vertical industrial policies to manage the reallocation of resources from polluting to non-polluting activities. We illustrate this dynamic by investigating the least-likely case of the European Union, a polity heavily tilted towards market governance. European climate policymakers, we argue, have incrementally moved away from the primacy of regulatory, market-making tools and have introduced a plethora of vertical instruments to shift resources away from climate-harming fields. This experimentation with vertical policies unfolds against the backdrop of a thirty-year institutional legacy of single market-oriented policy in the energy field.

Keywords: climate change; cohesion policy; European Union; green transition; industrialpolicy; regional restructuring; Energiewende; Europäische Union; Industriepolitik; Klimawandel; Kohäsionspolitik; regionaler Strukturwandel (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-eec, nep-ene, nep-env and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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