Floods, droughts, wildfires, and rising temperatures are stark reminders that urgent action is needed to protect our planet. Green industrial policy offers a pathway to transform economies by creating decent jobs, reducing greenhouse gas emissions, and ensuring communities thrive in a sustainable future. This factsheet, part of the IEJ’s 2025 G20 series, explores what green industrialisation means, why it matters, and how the G20 can ensure it is fair and inclusive.
What is green industrial policy?
Green industrial policy refers to strategies adopted by governments to develop environmentally sustainable industries. This includes investing in renewable energy, promoting low-carbon technologies such as green steel and green fertiliser, and phasing out polluting industries. Effective green industrial policies set a clear direction for economic development, align research and innovation with climate goals, and shift resources from low-productivity to high-productivity sectors.
Governments often support industrial transformation by providing targeted subsidies, low-cost development finance, protective trade measures, and public procurement to boost specific industries.
The fossil fuel challenge
Fossil fuel companies, backed by subsidies and minimal regulation, still dominate the global energy landscape. In 2022, fossil fuel subsidies reached $7 trillion worldwide. These subsidies make renewable energy less competitive, slowing its adoption. Well-designed green industrial policies can close this gap by supporting renewable technologies so they are affordable and accessible.
Global examples
Countries such as China, the United States, and members of the European Union have introduced national policies to boost renewable energy and green technologies. China’s targeted support for its electric vehicle industry has made it the world leader in affordable EV production and exports. These examples show that deliberate policy choices can transform industries and economies.
Challenges for developing countries
For many developing countries, implementing green industrial policies is hindered by:
- Limited financing, often requiring debt-based funding.
- Skills shortages in renewable technology sectors.
- Technological barriers and restricted access to innovations protected by intellectual property rights.
- Weak state capacity to regulate, incentivise, and manage large-scale transitions.
There is also a risk that new trade measures, such as the EU’s Carbon Border Adjustment Mechanism, could penalise developing countries reliant on carbon-intensive industries.
The G20’s role
The G20 includes major industrial and emerging economies with the power to shape global green industrialisation. In recent years, G20 leaders have pledged to promote renewable energy, develop green hydrogen, and expand access to green technologies. For the first time, the G20 is explicitly negotiating principles on green industrial policy and frameworks on critical minerals, which are essential for renewable energy systems.
What fair green industrialisation should achieve
A just green industrial policy should:
- Protect the environment for future generations.
- Ensure benefits reach disadvantaged groups, especially women, children, and climate-vulnerable regions.
- Diversify economies to reduce reliance on extractive industries.
- Support developing countries through technology transfer, fair trade agreements, and capacity building.
- Create decent work with fair wages, strong workers’ rights, and skills development.
- Build manufacturing capacity so resource-rich countries benefit from value addition.
Fighting for a just transition
The shift to green economies should not be dictated solely by governments and corporations. Communities, civil society, and grassroots movements play a critical role in shaping policies, ensuring accountability, and protecting resources. Activists can demand fair trade rules, advocate for localisation of critical mineral industries, and push for climate finance that supports green industrialisation without deepening debt.
Learn more
Explore the full findings and recommendations in the IEJ’s G20 Green Industrialisation Factsheet.
Other factsheets in the 2025 G20 series include:
- What is the G20?
- International taxation
- African debt crisis
- Food security
- Fossil fuel phase-out
- Climate financing
- Universal social floors
- Women empowerment