Green Industrial Policies (GIPs) worldwide aim to strategically direct economic activity to achieve the technological change necessary for decarbonization. To make GIPs politically feasible, the policy goals extend beyond decarbonization and encompass broader societal and economic objectives [1,2]. Under the Biden Administration, the United States (U.S.) had implemented the Inflation Reduction Act (IRA), one of the most comprehensive GIP packages worldwide. The IRA aims to 1) decarbonize the energy system by accelerating clean energy technology deployment, 2) strengthen economic competitiveness by reshoring manufacturing and supporting industry development in emerging technologies, 3) advance economic, social, and environmental justice by creating jobs and reducing energy bills and pollution in disadvantaged communities, and 4) ensure security of energy technology supply by building resilient and more domestic supply chains [3]. Despite this attempt to integrate broader societal objectives into climate action, the IRA is being repealed. In this piece, we urge the academic and policymaking community to adopt a concise framework that spans across multiple policy goals when evaluating GIPs to inform the ongoing public debate.

GIPs introduce complexity and trade-offs into climate policy design, tracking, and evaluation due to their multiple goals. Yet, much of the conversation in the U.S. remains focused on the effect of GIP repeals on greenhouse gas (GHG) emissions [4]. Even with the broad mandate of the IRA to transform multiple aspects of the socio-economic system, the academic literature on GIP remains relatively fragmented into evaluating individual policy goals or the tension between two goals at most [1,5]. For example, recent academic commentaries have highlighted the tension between the pace of decarbonization and domestic economic or security goals [6,7]. The focus on a few goals at a time risks a narrow public debate. The expansion of goals is what made GIPs possible in the first place, and hence one needs to evaluate across the entirety of the GIP goals.

Here, we propose a framework with four dimensions to structure the debate. Consistently applying this framework to the IRA and other GIPs will help experts and the public understand the practical implications of a full or partial repeal and develop informed opinions about the aspects of the GIP objectives they wish to advance. In Fig 1A, we propose decarbonization, security, economic growth, and just transition as the four dimensions of analysis, along which one can map out a) the intended goal, b) the link of the goal to measurable targets, c) the proposed instruments and their design to achieve these targets, and d) measurable outcomes to assess the effectiveness of the policy. We illustrate the application of this framework for the case of Lithium-ion (Li-ion) batteries, showing how the potential repeals could affect the identified policy goals.

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Fig 1. (A) Analytical framework for Green Industrial Policy (GIP) analysis with examples from the Lithium-ion (Li-ion) battery industry in the U.S. (B) Exemplary analysis for Li-ion battery technology support in the IRA across the four proposed GIP dimensions [3,8–10].

https://doi.org/10.1371/journal.pclm.0000614.g001

In Fig 1B, we map out the dimensions for Li-ion battery manufacturing support in the IRA. The Biden Administration aimed to increase the deployment of grid energy storage technologies to reduce intermittency from renewable energy, create construction jobs in disadvantaged communities, incentivize onshore battery manufacturing, and increase domestic production of critical minerals. This should have resulted in reduced construction of new gas-powered power plants, increased share of domestically refined battery minerals, increased share of domestic battery manufacturing, and increased wage disbursement in disadvantaged communities. Under the pressure of repeal, much of the intended impact will not materialize and the framework in Fig 1A can help structure such an analysis along the four policy dimensions.

Prior to the election, conservative groups supporting the current Trump Administration singled out the justice dimension for repeal, suggesting a focus on “energy and science issues, not politicized social programs” [11]. The groups have taken particular issue with the Just Transition aspects of the policy, including calling for repeal of the flagship Department of Energy program Justice40, which allocates 40% of the overall benefits of certain federal investments to disadvantaged communities. Post-election, in the Executive Order “Unleashing American Energy,” the Trump Administration ordered the elimination of national funding allocated for implementing the IRA [12]. This led to a freeze of funding for electric vehicle (EV) charging stations and subsidies that promote EVs over other technologies. Because loan guarantees supporting battery manufacturing have already been finalized, the most likely targets for elimination are tax credits, including the Clean Vehicle Tax Credits outlined in Section 30D, and the Prevailing Wage and Apprenticeship bonus for the Clean Electricity Investment Tax Credit (Section 48E). The repeal attempt will likely only be partially successful since significant portions of the fund are directed to states and districts represented by Republican Members of Congress [13]. The expected repeals of IRA provisions would reduce the demand for domestically produced Li-ion batteries (economic growth) and hinder the upskilling of lower-income workers (just transition). As a result, U.S. battery manufacturing may struggle to establish itself or achieve global competitiveness. Even if the market momentum keeps driving the development of a domestic battery sector, the employment benefits might not be equitably distributed (just transition). At the same time, the reduced mining activity in the U.S. (security) could also lead to less pollution in disadvantaged communities where these mines might have been located (just transition). This illustrates how trade-offs across the four GIP goals complicate the analysis. Policymakers and the public must weigh the cost of decarbonization against changes in domestic economic activities that ensure more equitable distribution of opportunities, balance local environmental impacts in disadvantaged communities with the security of critical mineral supply and consider how the quality of domestically manufactured batteries affects the competitiveness of related industries.

The above example highlights the importance of analyzing GIPs in a structured manner to evaluate their goals and targets, the instruments deployed to achieve those targets, the expected outcomes, and the changes due to a potential policy repeal. The systematic analysis of repeals is equally valuable for other technologies and geographies beyond the U.S. Many of the instruments analyzed in Fig 1B are also enacted to support the nascent green hydrogen (gH2) industry [14]. The gH2 industry proposes a pathway to repurpose existing oil and gas infrastructure and capabilities when the global demand for oil and gas decreases. Yet, unlike the Li-ion battery industry, the nascent gH2 industry might fail to take off altogether due to the investment uncertainty created by the repeals. Another example is the Clean Industrial Deal proposed by the European Commission [15]. After five years of increasing ambition and advancing climate policy instruments as part of the European Green Deal (2019–2024), the new Commission - facing a major crisis in European industry, as well as trade tensions and security concerns - is focusing on increasing competitiveness and technological innovation. As a result, decarbonization may take a back seat and other goals might be prioritized.

Researchers must rise to the challenge of comprehensively tracking GIP and informing the public about the potential impacts of policy repeal across all four dimensions, not just decarbonization or a select few dimensions. We acknowledge that this entails significant methodological and data challenges. First, policymakers can support research by specifically articulating the GIP goals across the four dimensions outlined in Fig 1, including their prioritization, while acknowledging the expected trade-offs and synergies in the implementation. Second, researchers can provide more valuable guidance by explicitly considering the four dimensions in their analysis. This would enable the academics and the media – and, by extension, the public – to understand better what GIPs aim to achieve and the full implications of the repeals. Looking ahead, this framework can also assist policymakers in prioritizing goals more effectively by refining the selection and design of targets and instruments. Given the urgency of the low-carbon transition, it is imperative to use an analytical lens proportional to the policy goals to evaluate progress and setbacks. Our framework can help ensuring accountability in policymaking and designing climate and industrial policies that are both effective and enduring.