The Political Economy of Green Industrial Policy: the View from the Ground in the UK

Industrial strategy has become increasingly prominent and geopolitical in the wake of the global financial crisis, while also becoming progressively more ‘green’. The UK provides an interesting case of this evolution, as it is It has launched a green industrial strategy targeting clean energy technologies as part of the 2025 Modern Industrial Strategy, but is also one of the countries where a neoliberal policymaking paradigm remains most intact. Reflecting tensions between this paradigm and electoral drivers for industrial policy to address regional and skill-based inequalities, green industrial strategy has been through several cycles of hype and collapse since the late 2000s. While much of the industrial policy debate is dominated by economics, our analysis takes an explicitly political economy approach (Juhász and Lane 2025) that problematises these tensions. Current political economy research on the UK draws on macro-comparative political economy frameworks that emphasise the weaknesses of institutions and state capacity, and the dominance of the finance sector and the Treasury. These factors are often presented as making sustained support for an expansion of UK manufacturing – including in clean tech – extremely difficult. While we agree that such factors are important in shaping the possibilities for UK green industrial policy in practice, along with other factors such as the structure of industrial ownership, we also argue that a macro-level view misses what is happening ‘on the ground’ (Frandsen 2025). We develop this argument through an assessment of industrial policy in three key industries: offshore wind, batteries and heat pumps, drawing on surveys of industry and policy literature, and interviews with private sector, industry association, think-tank and policy-making actors. We argue that beneath the churn in headline strategies in the UK there has been more progress in establishing institutions to support industrial redevelopment than is generally recognised, but also important differences between sectors. We argue that the goals of green industrial policy in the UK are most effectively met when policy in practice resembles ‘industrial transition deals’ that coordinate changes in markets and industries, involving elements of both industrial and climate policy. We note that despite official pronouncements of joined-up policy, the degree to which this actually happens across our three cases varies considerably, reflecting differences in both the nature of incumbent interests and the politics of market transformation. Finally, we draw out implications of the UK case and our approach for the analysis of green industrial policy more widely, with a call to move beyond macro-comparative frames to also include sector and industry-specific political economy dynamics. Frandsen, S. L. (2025). On the ground: the microfoundations of green industrial policy. New Political Economy, 1-22. https://doi.org/10.1080/13563467.2025.2573709 Juhász, R., and Lane, N.(2025) The Political Economy of Industrial Policy. Working Paper 32507. National Bureau of Economic Research. http://www.nber.org/papers/w32507