Industrial Policy Tools for Inclusive Green Industrialisation: Exploring the Industrial Policy Tools Needed to Promote Inclusive Green Industrialisation in South Africa

Abstract

Addressing climate change and reducing environmental degradation is a global priority, particularly for countries like South Africa which face the dual challenge of balancing economic growth with environmental sustainability. South Africa’s carbon intensive economy has failed to incorporate environmental costs effectively, hindering both climate change mitigation and broader socio-economic transformation. Given these challenges, an inclusive green industrialisation strategy is key to driving a green transition that delivers both economic growth and social development. Industrial policy can play a crucial role in this transition by directing industries toward sustainability. The South African Renewable Energy Masterplan (SAREM), recently approved by cabinet on the 27th of March 2025, serves as a key potential policy initiative aimed at promoting renewable energy and green industries, facilitating a shift from carbon-intensive sectors towards more sustainable and resilient forms of economic growth. However, the success of such initiatives depends on the strategic use of industrial policy tools that support both economic development and social inclusion. This research explores the industrial policy tools necessary for advancing inclusive green industrialisation, in South Africa. The paper assesses SAREM’s potential as a policy framework, by drawing lessons from past approaches. By conducting an extensive literature review and a case study analysis of SAREM, this study contributes to academic knowledge on the interplay between industrial policy and green economic transformation