Green Subsidies and the Promotion of Eco‐Social Policy in Germany and the United States

The climate crisis poses an acute threat to humanity. Eco‐social policy can help mitigate this threat, but eco‐social policy and the green transition are expensive. Our paper contributes to a better understanding of the role that green subsidies play in advancing eco‐social politics and policies. We assert that green subsidies increase the political viability of eco‐social policies. Green subsidies lead trade unions and business organizations to support eco‐social policies, regardless of institutional differences. We illustrate these positive‐sum effect dynamics with a most different systems design that compares green subsidies and eco‐social policies in Germany (subsidies, qualification and training measures, coal phase‐out strategy, green housing) with the United States (climate‐related tax credits, Inflation Reduction Act, and green housing). Based on a content analysis of documents and interviews, our comparison of business organizations and unions in both countries reveals strong and broad support for green subsidies in combination with eco‐social policies. We also discuss the second Trump administration and suggest that green subsidies help advance the green transformation in the face of significant political adversity.