"In recent decades, the discussion of industrial policy has been highly charged ideologically and frowned upon, especially in the field of mainstream market-liberal economics. Nevertheless, industrial policy has been practiced throughout the years in all developed economies, however cautiously. The past years, characterized by exogenous shocks and increased pressure to take action to tackle the climate crisis, have challenged economics and economic policy to rethink its course. Thus, “the policy that shall not be named” (Cherif & Hasanov 2019) is returning to the policy debate to offer solutions for the transformation of the economy. Thus, the progressive German government that came into office in 2021 set about developing a new industrial strategy while setting ambitious climate goals in its coalition agreement. Respective measures aimed at fighting climate change at home include phasing out coal as an energy source by possibly 2030, eight years ahead of the original schedule, meeting 80% of demand for electricity with renewables within less than a decade and putting 15 million electric vehicles on German roads by 2030. The agreement also proposes phasing out gas for power generation by 2045 and setting a minimum carbon price of € 60 per ton. However, it was unclear at the time that this ambitious plan would come under additional pressure. The drastic geopolitical and geo-economic consequences of Russia's invasion of Ukraine on 24 February 2022 were unseen and unforeseen. The German Chancellor Olaf Scholz called it nothing less than “a watershed” (Zeitenwende), “And that means that the world afterwards will no longer be the same as the world before. […] Whether we permit Putin to turn back the clock to the nineteenth century and the age of the great powers. Or whether we have it in us to keep warmongers like Putin in check. That requires strength of our own.”1 Strength of our own – that also meant in particular drastically reducing economic independence, starting with gas supplies from Russia that needed to be cut. Cheep gas was one main pillar of Germany's economic success. The need for an enormous acceleration of the economic transformation of German industry is the ultimate consequence that makes fast and effective industrial policy more necessary than ever. At the same time the United States is focusing on rebuilding its own economy – in particular its manufacturing sector – setting course to reunite a divided country by introducing a huge subsidy package for green industries – the Inflation Reduction Act. As much as the American return to climate action was welcomed by Europeans, its financial scope and non-bureaucratic accessibility put the German government and the European Commission under even greater pressure to act. This study explores the Inflation Reduction Act as an industrial policy instrument and contrasts it with European industrial policy to date. The author makes recommendations for an overhaul of German and European industrial and climate policy, which he derives from a well-founded critique of market liberalism. I hope that this study will provide you with interesting reading and offer valuable suggestions for a European debate on industrial policy..."

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