2019/41 | LEM Working Paper Series | ||||||||||||||||
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The green transition: public policy, finance and the role of the State |
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Francesco Lamperti, Mariana Mazzucato, Andrea Roventini and Gregor Semieniuk |
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Keywords | |||||||||||||||||
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market-shaping; mission-oriented; green finance; renewable energies; transition;
entrepreneurial state.
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JEL Classifications | |||||||||||||||||
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H11, H70, Q48, Q54, Q55
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Abstract | |||||||||||||||||
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While investments into renewable energy technologies are growing almost everywhere, the chances to meet
ambitious emission and climate targets, as those envisaged in the Paris Agreement, are scant. To speed up
the transition, policy makers need to design and implement a policy mix that could affect not just the quantity
of green finance, but its quality as well. In this paper, we argue that a mission-oriented approach to the
transition from an economy with high, to one with low greenhouse gas emissions, coupled with the state taking
on the role of an entrepreneurial state, could provide an effective win-win strategy to address climate change
concerns (embodied in emissions reduction and adaptation boosting) and build the basis for the next phase of
growth and technological progress. In practice, this amounts to (i) abandoning the view that cost-internalization
of environmental externalities would suffice to induce an effective transition (ii) developing a multi-level and
cross-sectoral governance of the transition, with a clear direction in terms of the technological trajectory to
favour, and (iii) designing a policy mix encompassing: fiscal instruments, targets and standards; public-private
co-funding schemes; financial regulation; and disclosure practices. Social scientists should support such
ambitious policy-design processes through adequate model development, where a combination of policies,
and a directive role of the state, can be accommodated and examined in detail.
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