Humanity is currently facing serious climate change challenges resulting from long-term reliance on unsustainable patterns of consumption and production, as well as the intensive use of land and energy resources. In addressing these challenges, there is a growing need to formulate an environmentally sustainable industrial policy capable of decoupling economic growth and improvements in quality of life from excessive resource depletion and waste generation. Achieving such a development model requires the accelerated development and deployment of new, advanced, and clean technologies, as green growth necessitates green technologies. Green industrial policy can be understood as a set of public measures and strategic state interventions aimed at transforming the structure of the economy toward environmentally sustainable sectors, technologies, and production processes. Its theoretical justification stems from the existence of market failures associated with climate change and the development of new technologies, including negative externalities, technological uncertainty, and coordination problems along value chains. The objective of this paper is to analyze the role of green industrial policy in overcoming market failures, with particular emphasis on its function in fostering innovation, reducing investment risks, and accelerating the diffusion of green technologies. Special attention is devoted to examining the instruments of green industrial policy, including subsidies, regulatory measures, and institutional support mechanisms, as well as their economic and developmental implications. The paper concludes that a properly designed industrial policy represents a key element of a successful green transition, enabling the simultaneous achievement of economic development and environmental protection goals.

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