Green industrial policy for accelerating innovation in nascent value chains of climate-mitigating technologies

Accelerating climate-tech innovation in the formative phase is crucial to meeting climate goals. However, effective green industrial policies require an understanding of when and where to target policy interventions within the value chain. We conceptualize nascent value chains for climate-tech as product clusters and explore innovation patterns within and across them. We analyze 14 climate-tech sectors using early-stage private investments in over 3,600 North American firms (2006-2021). In terms of product clusters, only 15% of firms develop end products, while 59% provide components, manufacturing, or optimization products, and 26% develop services. Investment evolution reveals three patterns of innovation: maturing innovation (e.g., energy efficiency), ongoing innovation (e.g., energy storage), and emerging innovation (e.g., agriculture). This characterization of nascent value chains offers an analytical basis for green industrial policy, identifying critical structural segments for intervention and illustrating how different value chain positions can create varied opportunities and pathways for regional benefit.