The politics of technology bans: Industrial policy competition and green goals for the auto industry

Abstract

After decades of failure to reduce greenhouse gas emissions in the transport sector, several jurisdictions have in rapid succession announced future goals to phase out sales of internal combustion engine vehicles. This article argues that these announcements are predominantly a form of political signaling in a green industrial policy competition for alternative transport technologies, notably electric vehicles. We show that such signaling games in green industrial policy are likely to emerge when market growth for alternative technologies initiates industrial policy competition, which explains the clustered timing of political signals. A country’s position in the global auto industry, however, shapes the domestic political economy for announcing a phaseout goal. Countries with aspirations to develop export-oriented EV industries seek industrial upgrading; countries with existing export-oriented auto industries promote industrial renewal to maintain international competitiveness; and importing countries pursue phaseout goals primarily for environmental reasons. Our findings suggest that industrial upgraders can induce incumbent producer countries to participate in green industrial policy competition, leading to the “trading up” of energy technology policy goals. This contrasts with classic patterns of environmental policy competition, in which advanced industrialized nations are the pacesetters.