Rent Management: The Heart of Green Industrial Policy

The paper contends that while green industrial policy is often criticized for enabling rent-seeking, the creation of rents is necessary to incentivize investment in high-risk green technologies where markets fail. It proposes shifting the policy focus toward 'rent management'—the strategic process of defining, offering, and eventually withdrawing extra profits—to ensure a transition to a low-carbon economy despite high technological uncertainty and long investment horizons.

• The authors argue that creating rents is a necessary tool to attract investment into risky green technology sectors that markets otherwise fail to support, countering the criticism that green industrial policy merely promotes rent-seeking.
• The paper proposes a shift in focus toward 'rent management,' which it defines as the strategic ability to determine the appropriate level of extra profits, the method of delivery, and the timing of their removal once markets become self-sustaining.
• Rent management within green industrial policy—defined as government-led restructuring toward a low-carbon economy—is particularly difficult due to the combination of long investment timeframes, high technological uncertainty, and the urgent need for immediate action.

APA

Stockholm Environment Institute (2015). Rent Management: The Heart of Green Industrial Policy. https://www.sei.org/publications/rent-management-the-heart-of-green-industrial-policy/

Chicago

Stockholm Environment Institute. Rent Management: The Heart of Green Industrial Policy. 2015. https://www.sei.org/publications/rent-management-the-heart-of-green-industrial-policy/.

Wikipedia

{{cite report |author=Stockholm Environment Institute |title=Rent Management: The Heart of Green Industrial Policy |date=29 October 2015 |url=https://www.sei.org/publications/rent-management-the-heart-of-green-industrial-policy/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stockholmenvironmentinstitute2015rent, author = {{Stockholm Environment Institute}}, title = {{Rent Management: The Heart of Green Industrial Policy}}, institution = {Stockholm Environment Institute}, year = {2015}, month = oct, url = {https://www.sei.org/publications/rent-management-the-heart-of-green-industrial-policy/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }