Fulfilling the Paris Agreement’s climate targets and the UN Sustainable Development Goals (SDGs) is a challenge that calls for a fundamental transformation of existing industrial systems. To date, production processes have been heavily dependent on coal, oil and gas as both energy sources and feedstocks – especially in the basic materials sector. The latter’s transformation will require entirely new production processes and patterns of use in many areas. Although there has already been considerable progress in recent years in terms of developing the necessary technologies and strategies, the appropriate policy frameworks needed for their implementation are often still lacking.

This is where transformative industrial policy comes in, guiding industrial production systems towards sustainable development while maintaining competitiveness. Transformative industrial policy facilitates long-term development processes that go far beyond merely optimising existing technologies and practices. It reduces financial risks, gives companies effective and efficient support as they make the enormous investments required and lays the groundwork for transformation in terms of infrastructure. In doing so, it also helps to build more resilient supply chains.