Should Green Industrial Policy Be Technology Neutral?

ABSTRACT The central question of this paper is whether technology neutrality is, on balance, a helpful principle for green industrial policy (GIP). To answer this question, we first conduct a systematic literature review to understand what GIP is. We find that the term is most often used by authors in a neoclassical economic tradition and propose a definition that encapsulates the dominant elements of various definitions in this literature. Using a transdisciplinary approach, we turn to the question of technology neutrality in GIP. Considering a range of disciplinary perspectives and arguments, we conclude that the weight of argument and evidence lies strongly against de jure technology neutrality in GIP. Furthermore, the literature provides a range of alternative principles and approaches that can better address potential government failures in GIP and related policies. Finally, combining theoretical approaches and case‐study evidence from the US Inflation Reduction Act and the European Union's Carbon Border Adjustment Mechanism, we provide potential explanations for why technology neutrality nonetheless remains a popular principle in GIP.