In partnership with UK Foreign, Commonwealth & Development Office (FCDO) and E3G
Shared commitment to cooperation
Over three days of discussion at Wiston House, there was a clear consensus among participants on the shared value of international cooperation on carbon leakage. The central question of this dialogue was therefore not whether to cooperate, but how, where and by whom progress should be driven forward.
Reflecting this common ground, participants concluded the event with a joint commitment to strengthen cooperation and efforts to address carbon leakage:
“International cooperation on carbon leakage will be a core component of building an integrated system to reduce global emissions. We will champion systems that are driven by transparency, compassion and trust, are inclusive of a wide range of countries and other stakeholders, reinforce evidence-based good practice, strengthen multilateral cooperation, and support climate ambition and economic prosperity. We collectively commit to promote, scale, and accelerate these urgent efforts.”
Executive summary
Accelerating the decarbonisation of emissions-intensive, trade-exposed (EITE) sectors is one of the most important, yet complex dimensions of the green transition. As governments seek to advance in their industrial decarbonisation efforts, concerns around carbon leakage have become central to many policy debates. In response, a growing number of jurisdictions are introducing or considering carbon border measures and other anti-leakage policies. While intended to safeguard domestic climate ambition, in particular carbon border measures have led to contentious discussions about fairness, administrative burden, and uneven impacts across countries and sectors.
This Wilton Park dialogue brought together policymakers, experts and civil society representatives from around the world to explore international solutions to carbon leakage and identify pathways to strengthen cooperation on shared objectives. These include accelerating industrial decarbonisation globally, particularly in EITE sectors such as steel, aluminium and chemicals where scaling up low-carbon technologies still remains commercially challenging.
Participants identified two broad avenues for advancing cooperation.
First, strengthening support for industrial decarbonisation, particularly in developing economies, was seen as essential to mitigate carbon leakage risks. This includes supporting the development of carbon pricing systems, for instance by expanding measurement, reporting and verification (MRV) capacity building efforts. Beyond carbon pricing, scaling up assistance for developing long-term decarbonisation pathways, enhancing mutual recognition of product standards, leveraging public and private procurement to steer demand towards low-carbon solutions, and establishing best practice frameworks for industrial subsidies and trade-related climate measures were discussed as tools to accelerate industrial decarbonisation globally.
Second, enhancing interoperability of carbon border measures and underlying MRV systems was identified as another central and feasible area for progress. While participants shared the view that fully harmonising carbon border regimes is unrealistic, given that they are tied to unique underlying carbon pricing schemes, ensuring that carbon accounting standards are similar enough so that producers are not forced to establish different accounting systems for compliance was seen as a pragmatic and achievable avenue for stronger cooperation. In this context, advancing regional coordination on MRV systems was discussed as a possible lever towards interoperability. Participants noted a unique window of opportunity: while a limited number of carbon border regimes are currently in place, interest is growing. Early coordination can help shape alignment before divergent systems become operational and drive up compliance costs further.
A three-step pathway towards making progress on interoperability was discussed:
- Taking stock of existing initiatives and identifying country champions to drive the issue forward at the international level.
- Facilitating inter-institutional cooperation.
- Advancing concrete solutions through appropriate channels, for example by agreeing on guiding principles on MRV systems and carbon accounting methodologies, or by establishing common design principles for carbon border measures.