Green New Deal Policy Instruments: Industrial Subsidies, Carbon Pricing, and Innovation Support

This study focuses on three policy tools commonly used in the Green New Deal climate strategy: carbon pricing, government subsidies and public support for innovation. Carbon pricing plays a role by increasing emission costs, and when the income is returned to households or businesses, its economic side effects can be alleviated. Subsidies help new technologies scale when costs are still high. Innovation support does not reduce emissions immediately, but their effectiveness largely depends on their design methods, such as whether projects are selected through competitive bidding, and whether support gradually decreases over time. Innovation policies play different roles. Instead of immediately reducing emissions, it shapes the direction of future technology development by encouraging investment in clean technology and increasing the number of relevant patents. In fact, a single policy tool is not enough to promote deep decarbonization. Phased combination use is more effective: pricing sets long-term signals, subsidies help new technologies expand, and innovation support lays the foundation for future breakthroughs.