Explore our expert insights and analysis in leading energy and climate news stories.
The Center on Global Energy Policy (CGEP) at Columbia University SIPA today released a new report examining Project-based Carbon Credit Markets (PCCMs) in G20 countries and Singapore. A...
Get the latest as our experts share their insights on global energy policy.
The Center on Global Energy Policy is providing live updates on key developments related to the Iran crisis. Check back here for the latest.
Hear in-depth conversations with the world’s top energy and climate leaders from government, business, academia, and civil society.
The 109-day-old Iran crisis is heading toward an off-ramp in the form of a not-yet-public Memorandum of Understanding to reopen the Strait of Hormuz. While energy markets are...
Find out more about our upcoming and past events.
This event will take place in-person in Washington DC, at the Rayburn House Office Building, Room 2168 (Gold Room). Advance registration is required. Announcing New Columbia University Publications...
Insights from the Center on Global Energy Policy
This Energy Explained post represents the research and views of the author(s). It does not necessarily represent the views of the Center on Global Energy Policy. The piece may be subject to further revision. Contributions to SIPA for the benefit of CGEP are general use gifts, which gives the Center discretion in how it allocates these funds. More information is available here. Rare cases of sponsored projects are clearly indicated.
The World Bank is revisiting one of its most entrenched positions, publicly questioning its long-standing emphasis on market-led approaches in economic policy. In the recent report “The Industrial Policy for Development,” the lender’s research department said its position “that helped stigmatize” the idea of industrial policy 30 years ago “has not aged well—it has the practical value of a floppy disk today.” Global policy consensus has shifted toward an active role for governments in enabling strategic industries. The real test of the World Bank’s industrial policy rethink will be whether it changes how the institution finances and advises countries in energy-related sectors, because these are critical to structural transformation.
The World Bank report reviews some of the scholarship on the subject and examines the national development strategies of 183 countries. Its taxonomy of 15 industrial policy tools offers a useful framework for identifying how different instruments can address specific challenges. But the question remains whether this effort will matter in practice to its lending and advisory services. The world has 75 low-income and lower-middle-income economies that face various binding constraints to their structural transformation, particularly in energy-related sectors, which are both enablers of industrialization and targets of industrial policy. These countries face simultaneous challenges of expanding electricity access, securing energy supplies amid geopolitical shocks, and building competitiveness in industries for the global energy transition.
This blog is derived from the author’s contributions to discussions with the World Bank report’s authors at the Growth Summit 2026 in March in Rabat, Morocco, and a private roundtable convened by the Boston University Global Development Policy Center in April in Washington DC. It argues that the World Bank’s intellectual shift on industrial policy is largely a response to geopolitical and economic realities. The real question is whether that shift will translate into operational support for the kinds of energy projects that will drive structural transformation in low- and middle-income countries.
The World Bank’s changing tune on industrial policy reflects an explicit embrace of industrial policy by its largest shareholders. From the United States to the European Union, governments are now openly intervening in markets to shape economic outcomes. Whether acquiring equity stakes in mining companies to secure critical minerals, subsidizing semiconductor plants, or considering managed trade with competitor countries, industrial policy has moved from the margins to the center of economic strategy in the past decade—especially since the Covid-19 pandemic. Decision-makers seem to appreciate the need for active state support to be competitive in green industries as well, such as renewable energy, electric mobility, and battery storage. Overall, national security concerns, defined in terms of supply chain resiliency and maintaining economic competitiveness, are in some cases taking precedence over erstwhile espoused efficiency gains of global economic integration.
Another reason for this rethink at the World Bank is that the global economy is being reshaped by previously poor countries that have actively used industrial policy in defiance of conventional wisdom to accelerate their development. Most notable is China, which has become the world’s second-largest economy through sustained adherence to five-year plans over the course of four decades. The country now leads in several “frontier industries,” particularly those central to the clean energy transition. Viet Nam achieved near-universal electrification of 99.8% with state-owned entities taking the lead and has now emerged as a major manufacturing hub. Through top-down mandates, Morocco has also closed the electricity access gap, developed industrial parks, and built renewable energy capacity, including the world’s largest concentrated solar power plants. These experiences highlight the role of strategic and coordinated government intervention in building competitive industries.
Many other low- and middle-income countries have paid the price for complying with the received wisdom that discouraged state intervention in strategic sectors. Around 80% of the over 700 million people lacking access to electricity is concentrated in Sub-Saharan Africa, with South Asia making significant progress recently in achieving universal electrification (see Figure 1). While countries such as Bangladesh and Ethiopia have made progress in building viable industrial parks, and India is achieving productivity gains in services sectors, manufacturing value added as a share of GDP has largely stagnated or declined for all of them.
The divergence between countries that successfully used industrial policy, mostly in east Asia, and those that did not, mostly in sub-Saharan Africa and south Asia, is reflected in their manufacturing performance over the past four decades (see Figure 2).
A more difficult question is whether the World Bank’s evolving position on industrial policy will translate into relevant lending and advice to the world’s remaining poorer countries, particularly in energy-related sectors necessary for economic development. There are reasons to be both hopeful and cautious.
In terms of closing the electricity access gap, the World Bank is playing a more constructive and decisive role. It now has a flagship program, Mission 300, to provide electricity access by 2030 to 300 million people on the African continent in partnership with the African Development Bank and philanthropies such as the Rockefeller Foundation. The program recognizes that electricity access is not merely a social objective but a prerequisite for productivity growth, and it envisions governments playing a leading role through national energy compacts. This approach represents a fundamental shift in the World Bank’s energy sector assistance, which had previously focused on liberalization reforms to restrain the role of the state.
But the industrial policy report originated in the World Bank’s research department, where intellectual reappraisals do not always translate into operational change, such as updating lending tools and advisory services. Ultimately, much will depend on whether the institution’s leadership and country teams embrace this shift.
The author has seldom seen the World Bank approach energy as an integrated industrial system shaped by supply chains with linkages to other economic sectors. As a result, it is often reluctant to finance or advise on projects such as processing plants and refineries that could produce fuels, fertilizers, and petrochemicals; products becoming more valuable amid disruptions in the Strait of Hormuz and that many countries in Asia and Africa now lack. The World Bank’s support for gas-to-power projects has also been limited, constraining the prospects for a practical and equitable energy transition. In this context, therefore, it is not clear that the World Bank can help countries build capabilities in clean energy manufacturing—including solar photovoltaic components, wind turbines, and batteries.
Energy is not only an input to economic activity, it is the basis of technological learning, and energy resource endowments (e.g., hydrocarbons, critical minerals, and other commodities) are a source of geopolitical leverage. Whether the World Bank adapts its financing and advisory model to this reality will determine whether its industrial policy rethink proves meaningful or remains rhetorical.
The Trump administration is increasingly using equity investments as a tool of industrial policy to support domestic critical minerals supply chains.
CGEP scholars reflect on some of the standout issues of the day during this year's Climate Week
The Trump administration may release a blueprint for a US sovereign wealth fund (SWF) in early May after the president signed an executive order in February giving the Secretary of the Treasury and the Secretary of Commerce 90 days to develop a plan.
President Donald Trump has made energy a clear focus for his second term in the White House. Having campaigned on an “America First” platform that highlighted domestic fossil-fuel growth, the reversal of climate policies and clean energy incentives advanced by the Biden administration, and substantial tariffs on key US trading partners, he declared an “energy emergency” on his first day in office.
Project-based carbon credit markets (PCCMs) facilitate the generation, trading, and retirement of carbon credits from projects that remove, reduce, or avoid greenhouse gas emissions.
