A primary policy instrument under green industrial policy is:

• A. Subsidies for renewable energy manufacturing
• B. Tariffs on renewable energy equipment
• C. Cutting energy efficiency standards
• D. Subsidies for fossil fuels

Answer: (A)

Green industrial policy aims to build and scale domestic clean-energy supply chains by reducing the upfront costs and risks of entering the market. Subsidies for renewable energy manufacturing directly lower production costs, expand manufacturing capacity, and accelerate learning-by-doing. This helps bring down the price of renewables, creates domestic jobs, and strengthens local supply chains, making clean energy more competitive with fossil fuels in the long run.

Other options tend to undermine or misalign with those goals. Tariffs on renewable energy equipment can raise project costs and slow deployment, which conflicts with the aim of rapid clean-energy expansion. Cutting energy efficiency standards would reduce progress toward lower energy demand and overall system efficiency. Subsidies for fossil fuels directly oppose green policy objectives by supporting high-emission energy sources instead of transitioning away from them.