Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/316266 
Year of Publication: 
2025
Series/Report no.: 
DIW Discussion Papers No. 2114
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
European climate policy was traditionally pursued in the expectation of global policy convergence, ensuring equal opportunities for domestic and foreign firms in achieving climate neutrality. However, increasing geopolitical fragmentation has disrupted this expectation. Across the globe, national strategies increasingly favor economic policies that benefit domestic industries and coercive economic networks, altering the effectiveness of climate measures along international value chains. This study evaluates three policy approaches governing the transition to a climate neutral basic materials sector - (i) polluter pays, (ii) dedicated policies targeting both production and use, and (iii) green demand - to assess their political viability in the context of European policy in a fragmented world. Our analysis suggests that in a fragmented world, both the polluter pays and green demand policy approaches face significant challenges in achieving climate neutrality at sufficient stringency. A decarbonization approach based on separate but coordinated policies for material production and use appears to be more politically viable.
Subjects: 
Industrial decarbonization
Industrial policy
Climate policy
Geopolitical fragmentation
Value chains
Statutory incidence
Economic incidence
JEL: 
F59
P18
Q58
Q59
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.