A range of different options for facilitating international cooperation to address carbon leakage was discussed. These included ways to support industrial decarbonisation in developing economies, alignment of MRV systems and carbon accounting methodologies, product standards and industrial subsidies.
Supporting industrial decarbonisation in developing economies
Capacity building: MRV systems
Participants emphasised the need to strengthen and expand MRV capacity building efforts, particularly in developing economies. While current technical assistance programmes, such as the World Bank’s Partnership for Market Implementation or activities of the International Carbon Action Partnership mainly focus on supporting the design and implementation of carbon pricing and carbon market policies, participants noted that carbon border measures introduce additional challenges, particularly in relation to product-level embedded emissions accounting. A particular focus of these programmes should lie in improving digital infrastructures and in aligning domestic reporting frameworks with international standards.
Examples discussed include EU support to Malaysia in aligning transparency reporting and carbon accounting systems, as well as long-standing UK technical assistance to China’s carbon market, which has helped build high-integrity reporting systems and led to learning spillovers across ASEAN members.
Support for long-term decarbonisation pathways
Beyond accelerating the build-up of technical MRV capacity, participants emphasised the importance of technical assistance for long-term industrial decarbonisation strategies. Initiatives such as Japan’s Asia Zero Emission Center[4] and UK PACT[5] were mentioned as examples of support for country-specific decarbonisation pathways and strengthening of local analytical capacity. Participants noted that such efforts should be scaled up.
More broadly, participants discussed the need to complement anti-leakage measures with additional policies such as technological cooperation as well as climate finance and investment support to help enable industrial decarbonisation and avoid carbon lock-ins in developing economies. Balancing “sticks” with credible “carrots” was therefore seen as an important lever to accelerate industrial decarbonisation and rebuild trust. The Belém Declaration on Global Green Industrialization[6] launched at COP30 could serve as one of the potential avenues for such forms of cooperation.
Stronger regional coordination
Participants also highlighted the potential of stronger regional cooperation as one vehicle towards greater interoperability. In particular, regional coordination on MRV systems and the development of price corridors or linkages across existing carbon markets were discussed as ways to reduce leakage risks. Examples included, but were not limited to, deeper coordination within ASEAN members and the exploration of broader Northeast-Southeast Asian carbon corridors to promote greater alignment in carbon pricing approaches and high-integrity MRV standards.
Alignment of MRV systems and carbon accounting methodologies
Towards interoperable systems
Participants emphasised that progress on carbon leakage prevention and interoperability should be strengthened by greater alignment of MRV systems and carbon accounting methodologies. Current MRV systems differ in coverage (e.g. sectors, gases, scope, points of regulation), emissions estimation methods, as well as reporting and verification requirements.[7] Discussions highlighted the importance of moving towards interoperable MRV systems, not through full harmonisation, but through convergence around shared principles and mutual recognition. Existing frameworks such as ISO standards and the GHG Protocol were widely recognised as a common reference point that can be leveraged to ensure greater alignment in carbon accounting methodologies. Beyond working towards a common “measurement stick”, participants emphasised the importance of sufficient disaggregation of emissions data to facilitate comparisons of overlapping segments across systems with different reporting boundaries. This should enable greater transformability, meaning that data generated in one system can be “translated” for use in another. Discussions emphasised the important analytical work of the Inclusive Forum on Carbon Mitigation Approaches (IFCMA) in this regard which has also formulated principles that aim to guide development of carbon intensity metrics – which quantify emissions per unit of production – and the design of policies based on them.[8] In this context, participants also pointed to the Open Coalition on Compliance Carbon Markets[9] formed at COP30 which sets out to work towards greater MRV systems alignment and long-term policy convergence. Participants emphasised the importance of building on existing initiatives and fora, instead of starting from scratch, to advance progress on interoperability.
Product standards
Strengthen governance and mutual recognition of product standards
Mutually recognised product standards were highlighted as important tools to enhance tradability of low-carbon goods and incentivise demand creation. By defining common criteria, for instance for embedded emissions, standards can enhance transparency and enable low-carbon producers to access new markets. In this context, the role of customs classifications and bilateral trade agreements was discussed. While the World Customs Organisation (WCO) Harmonized System (HS) traditionally does not differentiate by emissions embedded in the products, participants noted that recent revisions – such as new sub-headings for plastic products under HS 2028[10] – show that the system can evolve to help achieve environmental objectives. Upcoming HS reviews were seen as potential opportunities, building on existing standard-setting initiatives, for instance for green steel, to incorporate sustainability considerations in the HS framework. Discussions also highlighted the role of Free Trade Agreements as opportunities to establish mutual recognition of environmental standards, thereby facilitating trade in low-carbon products.
Public and private procurement to create demand signals
Public and private procurement play a key role in creating demand signals for low-carbon industrial production. Discussants identified green public procurement mandates, buyers’ alliances and guaranteed offtake agreements as possible levers to reduce investment uncertainty and accelerate industrial decarbonisation. By tying together public procurement requirements with private-sector purchasing commitments, governments and firms can help establish high-volume lead markets that make low-carbon production gradually commercially viable. In this context, coalition-based approaches were seen as particularly promising, for instance, coordinating a green steel buyers’ group to provide the bankable offtake certainty required for final investment decisions. Initiatives such as UNIDO’s Green Public Procurement Pledge[11] were brought forward as examples of effective commitments and international collaboration on procurement standards that aim to advance industrial decarbonisation.
Industrial subsidies
Framework for best practice on clean-industry subsidies
Participants discussed the significant rise in clean-industry subsidies in recent years. While such subsidies are important to accelerate industrial decarbonisation, they have also raised concerns about market distortions and unequal fiscal capacity across countries. Participants discussed the possibility of a framework of best practice to enhance transparency, coordination, and effectiveness. Existing plurilateral fora – such as the Climate Club, OECD Steel Committee, and the Integrated Forum on Climate and Trade – were referenced as potential platforms though discussions emphasised the importance of including the most important producer countries to maximise its impact.
Differentiated trade policy tools to incentivise low-emission products
Discussions also identified the use of differentiated trade policy tools as potential levers to incentivise the tradability of low-emission products. Reduced tariff rates for low-carbon products compared to conventional ones, however, require internationally agreed classifications on product standards and enforcement. The ongoing review of the HS under the World Customs Organisation was again raised as a potential opportunity to move towards this direction.
[4] https://www.meti.go.jp/english/policy/energy_environment/global_warming/azec/azec_en.html
[6] https://www.unido.org/sites/default/files/files/2025-11/COP30_Belem%20Declaration%20on%20Global%20Green%20Industrialization_Final%20%281%29.pdf?_token=1231317939
[7] A more detailed assessment of components of MRV systems that impact interoperability can be found here: https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/06/towards-interoperable-carbon-intensity-metrics_84dce81d/b185bcfa-en.pdf
[8] IFCMA principles that aim to guide development of carbon intensity metrics include: (i) ensuring proportionality, (ii) promoting innovation and competition and (iii) fostering interoperability; more detailed elaborations can be found here: https://www.oecd.org/en/publications/2024/11/towards-more-accurate-timely-and-granular-product-level-carbon-intensity-metrics-challenges-and-potential-solutions_c7b5c87e.html
[9] https://www.gov.br/mre/pt-br/canais_atendimento/imprensa/notas-a-imprensa/declaracao-sobre-a-coalizao-aberta-de-mercados-regulados-de-carbono/OpenCoalitiononComplianceCarbonMarkets.pdf
[10 https://www.wcoomd.org/en/media/newsroom/2026/january/hs-2028-introduces-new-sub-headings-for-plastic-products.aspx
[11] https://decarbonization.unido.org/wp-content/uploads/2026/02/iddi-gpp-pledge-announcement-2025.pdf