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The sunshine problem: Climate change and managed decline in the European Union

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  • Ergen, Timur
  • Schmitz, Luuk

Abstract

Decarbonization requires the winding down of - economically - fully viable, if not highly prosperous, lines of economic activity. Different from past episodes of industrial restructuring revolving around the managed decline of sunset industries, accelerating climate change requires reallocation away from economic activities where the metaphorical sun is still shining. Firms, owners, workers, regions, and polities structurally rely on these sources of prosperity and have interwoven their past and future lives with them. We argue that this problem has created a space for state actors to experiment with vertical industrial policies to manage the reallocation of resources from polluting to non-polluting activities. We illustrate this dynamic by investigating the least-likely case of the European Union, a polity heavily tilted towards market governance. European climate policymakers, we argue, have incrementally moved away from the primacy of regulatory, market-making tools and have introduced a plethora of vertical instruments to shift resources away from climate-harming fields. This experimentation with vertical policies unfolds against the backdrop of a thirty-year institutional legacy of single market-oriented policy in the energy field.

Suggested Citation

  • Ergen, Timur & Schmitz, Luuk, 2023. "The sunshine problem: Climate change and managed decline in the European Union," MPIfG Discussion Paper 23/6, Max Planck Institute for the Study of Societies.
    • Handle: RePEc:zbw:mpifgd:281202
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    Cited by:

    1. Skyrman, Viktor, 2024. "Industrial policy, progressive derisking, and the financing of Europe's green transition," Working Papers 78, Austrian Foundation for Development Research (ÖFSE).

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    Keywords

    climate change; cohesion policy; European Union; green transition; industrialpolicy; regional restructuring; Energiewende; Europäische Union; Industriepolitik; Klimawandel; Kohäsionspolitik; regionaler Strukturwandel;
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