Does green growth foster green policies? Value chain upgrading and feedback mechanisms on renewable energy policies

The expansion of renewable energies not only lowers carbon emissions, it also redistributes resources among actors. This article argues that green industrialization – specifically, manufacturing and the development of renewable energy technologies — creates economic gains that impact political processes and increase renewable energy policy ambition. Building on a combined framework of policy feedback and global value chain literature, we see domestic value creation as a key determinant of coalition strength and learning effects for policymakers. We analyze the relationship of value chain involvement to policy ambition using panel data on countries’ manufacturing and innovation activities in the wind and solar industry from 2010 to 2018. The results show a positive technology policy feedback mechanism, implying that higher local value creation leads to more ambitious renewable energy policies. These first large-N findings support previous case studies on the importance of green growth for raising policy ambition; it implies that transformative policies fostering value creation could create a virtuous cycle for policy ambition. We further propose an interdisciplinary research agenda to shed light on the role of value chain dynamics for policy feedback mechanisms across different political economies.