The success of the green transition depends on the radical transformation of production processes in highly polluting sectors such as steel. At the same time, policymakers face short-term costs in reducing steel production, as the closure of a steel plant can have serious economic and political repercussions. Managing the decarbonisation of steel production, therefore, requires governments to strike a difficult balance between several competing demands: skilfully combining carrots, in the form of incentives and subsidies for steel mills that switch production, with sticks, in the form of enforceable performance targets that direct economic actors to meet environmental objectives. As a result, decarbonisation is a challenging test of state capacity, especially in high-income economies characterised by high emissions and strong corporate resistance.
Using the steel sector in the Netherlands as a least-likely case study, this paper shows how state capacity for transformative decarbonisation policies can be strengthened through the interaction between multilateral environmental commitments, which create urgency in the policymaking process, and neo-corporatist institutions of interest intermediation, which help to overcome resistance by building consensus based on mutual trust between business and government actors. Drawing on official sources, secondary literature, and elite interviews, this in-depth analysis of the Dutch case contributes to the growing debate on the politics of state capacity for the green transition in high-income economies.
Fabio Bulfone, PhD, is Assistant Professor at Leiden University, The Netherlands. His research focuses on the political economy of industrial policy, peripheral capitalism and monetary union. He has published in Comparative Political Studies, Socio-Economic Review, Review of International Political Economy, Journal of European Public Policy, Governance, European Journal of Political Research and Competition & Change among others.