Industrial policy for unlocking the potential of the green energy transition in Serbia

Market fundamentalism (or neoliberalism) has proven to be a crisisprone economic model. Within this model, a number of in-built structural imbalances and their interactions have contributed to a downward spiral in economic performance. The end point of this evolution is a multi-crisis in which geopolitics has become an integral macroeconomic variable. Because geopolitics does not function as an antidote but rather as a remedy with predominantly counterproductive effects, the global economy has persistently lost recovery momentum and slipped into deeper crises, while human society simultaneously undergoes geopolitical regression. In such a context, preserving strategic autonomy becomes a particularly demanding task for any national economy. For Serbia, as a small, open, middle-income, landlocked economy on a convergence path toward the EU, this challenge is especially pronounced. These days, strategic autonomy entails a clear vision for accelerating the green transition through a new industrialization based on climate-neutral technologies, primarily in the energy sector and land-use industries. In this paper, we explore key insights into the efforts required to energize the green transition as a roadmap for reversing, or at the very least decelerating, the adverse dynamics of the current economic conjuncture. Serbia serves as the focal point of this analysis, with particular emphasis on the green energy transition as a critical pillar of this complex endeavor. The authors hope that the proposed platform for the green energy transition will be recognized as both feasible and implementable. The zero step in Serbia’s green energy transition is the build-up of a nature-centric mindset capable of fostering a so-called “ecological civilization” in the near future. To achieve this, two coordination mechanisms must be combined: the invisible hand of the market and the visible hand of the state. The paper also addresses two additional issues. First, it examines the specific characteristics of investments in biomass-based energy technologies. Second, it analyzes the policy mix required to stimulate investment in related technologies for renewable energy and land-use industries, carbon capture and utilization, grid optimization, lithium production, and other sectors integral to the green transition (e.g., the EV value chain). Building on the preceding line of reasoning, the paper is organized into five main sections, in addition to the Introduction and Conclusion. Part 1 examines the root causes and key deficiencies of market fundamentalism. Part 2 discusses the necessity of the green transition as a pathway toward ecological civilization. Part 3 elaborates a “to-be” scenario for Serbia, based on a circular growth model and a heterodox economic policy platform. Part 4 assesses Serbia’s economic preparedness for the green energy transition. Finally, Part 5, the paper’s pivotal section, presents a portfolio of green energy projects, providing detailed explanations of biomass-based energy production, which is proposed as the flagship project within Serbia’s broader green energy transition agenda.