A Strong Regulator? The EU’s Uneven Regulatory Capacity in Green Industrial Policy

Fabio Bulfone, Joan Miró and Manuela Moschella
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Fabio Bulfone: Institute of Public Administration, Leiden University, The Netherlands
Joan Miró: Department of Political Sciences, Pompeu Fabra University, Spain / JHU‐UPF Public Policy Center, Pompeu Fabra University, Spain
Manuela Moschella: Department of Political and Social Sciences, University of Bologna, Italy

Politics and Governance, 2026, vol. 14

Abstract: The European Union (EU) has recently re-embraced industrial policy as a central instrument of economic governance, driven in particular by the challenges of climate change and intensifying geopolitical competition. This article examines regulation as a key instrument through which the EU seeks to promote industrial transformation. We conceptualize regulatory industrial policy as operating through three channels—structuring markets, shaping production processes, and directing financial flows—and develop a framework to explain variation in the European Commission’s regulatory capacity. Moving beyond accounts that emphasize legal authority and expertise, we argue that regulatory outcomes are shaped by two critical political factors: the cohesiveness of corporate actors and the salience of policy issues. Empirically, we illustrate this framework through three flagship initiatives of the European Green Deal: the EU taxonomy for sustainable activities, the revision of CO₂ emission standards for vehicles, and the Carbon Border Adjustment Mechanism. Together, these cases demonstrate how business cohesion and politicization condition the Commission’s regulatory capacity. More broadly, our findings challenge the view that regulation and industrial policy are antithetical. Instead, they show that regulation can serve as a core industrial policy instrument, steering markets and reshaping economic structures in ways traditionally associated with direct state intervention.

Keywords: European Green Deal; European Union; green industrial policy; industrial policy; regulatory capacity (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:cog:poango:v14:y:2026:a:11412

DOI: 10.17645/pag.11412

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