In this study, we explore the macroeconomic effects of green subsidies that governments apply to support the ecological transition in their economies. This includes subsidies provided to consumers, green firms, and private banks that lend to green firms. In our experiments, we assume that these subsidies are financed through a carbon tax. Calibrated to France, we find that providing subsidies to support the labor cost of green firms is the most effective tool to reduce pollution and support the growth of the green sector. This policy is more effective than a carbon tax alone, and especially for stimulating a positive supply–demand cycle in the green sector. In terms of pollution reduction, capital injection into green firms, green vouchers for consumers, and subsidies to private banks’ lending to green firms are less effective than carbon tax alone. If labor becomes more substitutable between green and brown sectors, the effects of green subsidies are attenuated. If capital becomes more substitutable between green and brown sectors, then the effects of green subsidies are amplified.