Trade facilitation implications of carbon‑intensity requirements

1. Introduction

The use of measures based on processes and production methods (PPMs) in trade-related regulatory contexts is a long-standing policy issue1. Non-product-related PPMs (NPR-PPMs) refer to processes and production methods that do not affect products’ physical characteristics or functional performance but may have environmental or social impacts – unlike product-related PPMs, which alter the physical characteristics of products. The overall objectives of NPR-PPMs measures and approaches vary across economies and can include market-based incentives, regulatory thresholds, and eligibility criteria for public support (Moïsé and Steenblik, 2011[1]).

Governments are increasingly considering regulatory approaches based on NPR-PPMs in response to growing demand from consumers, investors, and regulators for more detailed and reliable information on how goods are produced (OECD, 2024[2]; OECD, 2025[3]). Such approaches have emerged across a range of policy areas, including the protection of workers’ rights, the prevention of deforestation in global supply chains2^, and the assessment of products’ wider environmental impacts (Jaax and van Lieshout, 2025[4]; Pauwelyn, 2024[5]; World Bank, 2025[6]). Among these, several governments have explored or introduced NPR-PPMs measures related to products’ embedded greenhouse gas (GHG) emissions.

Carbon-intensity metrics can contribute to inform environmental objectives; however, the implementation of related requirements can also raise complexity and create new challenges for both enforcement authorities and firms (OECD, 2024[2]; WTO, 2023[7]; OECD, 2025[8]; WTO, 2022[9]). Just like other measures based on NPR-PPMs, carbon-intensity requirements can generate implementation and compliance costs, as they also require authorities and firms to verify how goods are produced rather than solely their physical characteristics. While some carbon-intensity requirements only demand compliance by firms behind the border, i.e. obligations once the product is already in circulation on the import market,3 others also entail processes at-the-border raising new practical questions about required information, data movement, and border checks.

To minimise costs related to the implementation of carbon-intensity metrics regulations, two types of interoperability are essential. Regulatory interoperability4 seeks to align the “what” of information requirements across jurisdictions, allowing data collected under one regulatory framework to be reused or recognised under another (see related analysis in (OECD, 2025[10]; OECD, 2025[8]) by the Inclusive Forum on Carbon Mitigation Approaches (IFMCA)). Technical interoperability focuses on “how” different actors and digital systems can exchange and process required information, and verify compliance effectively (OECD, 2025[11]; Stenzel and Waichman, 2023[12]). Together, these forms of interoperability can reduce duplication, enhance trust, and lower compliance costs for firms while supporting a more streamlined implementation of related measures.

Against this background, this report focuses on the technical interoperability challenges and trade facilitation implications arising from the enforcement of carbon-intensity requirements at the border, which remain an under-developed area of analysis. Initial findings from recent work on going paperless (OECD, 2025[11]) show that digitalisation of trade-related documents and processes is already complex and resource-intensive, and that evolving regulatory requirements can further increase administrative burdens and risks of disruption. While much of the existing discussion on carbon-intensity requirements has centred on regulatory aspects, less attention has been paid to the technical elements required for effective implementation. In this context, the report explores what technical interoperability would entail for key actors (economic operators, customs, other border agencies, etc.), and what technical elements are needed (sequence of enforcement checks, existing and new data elements needed to verify compliance, systems and standards to transmit, exchange, interpret, and securely process the data and documents). To clarify what these elements of technical interoperability entail, the report first maps the evolving landscape of carbon-intensity requirements (including both regulations in force and policy proposals). Without seeking to assess individual regulations, the focus is placed on key dimensions related to implementation at the border, applying a trade facilitation perspective.

This analysis forms part of a broader workstream on the growing role of trade facilitation in reducing trade costs while enhancing efficiency and traceability along supply chains, building on recent and ongoing work on trade facilitation (including going paperless (OECD, 2025[11]) and ongoing extensions to the OECD Trade Facilitation Indicators to better capture digitalisation and environment-related aspects).

The paper is structured as follows. Section 2 elaborates on the emerging use of carbon intensity-based metrics in trade-related contexts. Section 3 provides insights from a mapping of the evolving landscape of carbon-intensity requirements. Section 4 introduces relevant elements of technical interoperability, while Section 5 analyses potential disruptions and solutions to streamlining enforcement at the border of such requirements. Section 6 concludes and provides emerging policy observations stemming from the analysis.

Notes

← 1.  The analytical distinction between product-related and non-product-related processes and production methods (NPR-PPMs) arose in the context of early debates on environmental and other regulatory measures under the GATT and later the WTO. The concept of NPR-PPM emerged in the late 1980s and early 1990s as scholars and practitioners sought to describe measures that did not affect the physical characteristics of a product but regulated how it was produced. This distinction was shaped by GATT panel practice, notably in the United States – Tuna (Dolphin) disputes of the early 1990s, which reaffirmed that process-based requirements without physical traces raised challenges for border enforcement and non-discrimination rules. Over time, WTO jurisprudence, including in the United States – Shrimp (1998) and subsequent interpretations, refined the treatment of PPM-related measures and opened the way for a more nuanced legal discussion of NPR-PPMs under GATT Article XX and the TBT Agreement. The distinction between PR- and NPR-PPMS has since become a widely accepted analytical tool in trade and environmental law (Conrad, 2011[27]).

← 2.  A prominent example is the 2018 European Free Trade Association (EFTA) - Indonesia Comprehensive Economic Partnership Agreement (CEPA), which conditions tariff preferences for Indonesian palm oil on compliance with social and environmental requirements. Preferential treatment is limited to products produced in accordance with laws, policies and practices aimed at protecting primary forests and peatlands, halting deforestation, peat drainage and fire clearing, reducing air and water pollution, and respecting the rights of local and Indigenous Communities and workers (EFTA–Indonesia CEPA, 2018, Art. 8.10(2)(a) and (e)). Compliance is to be verified by the importing EFTA Parties (Switzerland, Iceland, Norway and Liechtenstein). In Switzerland, preferential treatment is granted where importers can demonstrate that the products are certified under the sustainability standard of the Roundtable on Sustainable Palm Oil (OECD, 2025[29]).

← 3.  For instance. through disclosure and reporting mechanisms, under which firms are required to measure and periodically report emissions.

← 4.  Regulatory interoperability includes methodological interoperability issues such as how to harmonise GHG accounting and reporting standards as highlighted in work carried out by the OECD IFCMA (OECD, 2024[2]).