The Promise of Green Lead Markets – Interests, Narratives and Actor Coalitions in Germany

As a consequence of increasing geopolitical tension and the looming erosion of the rule-based global order and the free trade paradigm, there has been a shift in the discourse on industrial policy in Europe. In the past years, industrial policy has received increasing attention as a tool to enable the transformation and decarbonization of industry, in particular energy-intensive sectors. However, the decarbonisation objective must now now align with—and often compete against—new priorities centered on economic competitiveness and resilience. The EU Commission’s 2025 Clean Industrial Deal provides clear evidence of this development. In this current industrial policy discourse, the concept of green lead markets plays a key role. Lead market policy instruments, such as preferential treatment in public procurement or quota for the private sector, are supposed to strengthen demand for industrial materials or products that were produced in a climate-friendly way, and to allow their producers to achieve a green premium that covers part or all of the additional costs associated with the new technologies and processes. Crucially, standards for the climate impact of production can be used as or combined with requirements that give preference to domestic products over imports. Lead market approaches thus are also potential tools to address international competitiveness and independence concerns. While an increasing body of literature aims to define optimal green lead market instruments, ambivalent outcomes emerge in political reality, such as the recently proposed automotive package that allows compensating less ambitious car fleet emission limits by using green steel in the production of the automobiles. Being outside of the classic discursive trenches around carbon pricing and subsidies, lead markets have the potential to appeal to different stakeholders and political parties and assemble new discursive coalitions. At the same time, there is still considerable uncertainty about the actual effects of green lead market policies, given that most of them have not yet been implemented and tested in practice. This paper aims to better understand the green lead market debate and to assess its potential to create new actor coalitions. To this end, we analyse how green lead market instruments may affect the interests of different actors, how these effects resonate with the narratives these actors use, and which discursive coalitions of actors on green lead markets are emerging. The research is based on an analysis of written statements from and interviews with different stakeholders. We use economic analysis based on quantitative data to identify potential effects of policies on actors’ interests in two case studies (currently planned: use of green steel in the automotive industry; quota for recyclate materials in plastics industry), and narrative analysis to understand actors’ role in the public discourse. The paper relates to the ECPR section 12 topics “domestic politics of net zero”, “climate policy and reindustrialisation”, and “sectoral and infrastructure politics of decarbonisation”.