What are environmental goods — and why are they so difficult to define?
At their core, environmental goods are products that help prevent, reduce, or repair environmental damage. They also support the sustainable use of natural resources and the transition to cleaner energy systems. From solar panels and wind turbines to air pollution control devices and wastewater treatment equipment, environmental goods are critical tools for achieving climate and sustainability goals.
But while the concept is intuitive, defining environmental goods in legal and trade terms is far more complicated.
No Single Definition — and That’s a Problem
Unlike agricultural or pharmaceutical products, there is no internationally agreed definition of an “environmental good.” Different countries and organisations take different approaches:
- The OECD/Eurostat definition focuses on products that directly serve an environmental protection function.
- The Asia-Pacific Economic Cooperation (APEC) took a more pragmatic approach, compiling a list of 54 products (e.g. renewable energy components, water filtration parts) for tariff reduction purposes.
- WTO members have never formally agreed on a definition, and the now-suspended Environmental Goods Agreement (EGA) negotiations stalled largely due to disagreements over which products should be included.
This lack of clarity has made it difficult to implement consistent trade liberalisation policies for environmental goods — and has slowed global efforts to scale up access to green technologies.
Examples of Environmental Goods
Environmental goods can be grouped into a few broad categories:
- Pollution management technologies: filters, scrubbers, catalytic converters, noise barriers
- Clean and renewable energy technologies: wind turbines, solar panels, geothermal pumps, biomass boilers
- Waste and water treatment: recycling machinery, water purification systems, composting equipment
- Resource efficiency and monitoring: smart meters, energy-efficient appliances, environmental sensors
Some of these goods are explicitly designed for environmental purposes, while others have dual or multiple uses, which complicates trade classification.
The Challenge of Dual Use and Tariff Codes
Many goods that serve environmental functions are not exclusively used for environmental ends. For example:
- Pipes and pumps may be used in both water purification and conventional infrastructure.
- Electric vehicles serve a green function but are also part of standard consumer markets.
Because of this, the Harmonized System (HS) used to classify traded goods does not always distinguish between “green” and “non-green” versions of the same item. This ambiguity leads to disputes in negotiations and inconsistent tariff treatment across countries.
Tariffs and Trade Barriers
Tariff barriers on environmental goods remain high in many jurisdictions, especially in developing economies. In theory, reducing tariffs would help spread clean technologies and lower costs for environmental infrastructure. But trade-offs emerge:
- Developing countries often want flexibility to build local green industries before liberalising imports.
- Developed countries tend to push for broader lists that include high-tech products dominated by their exporters.
These dynamics contributed to the breakdown of the WTO’s Environmental Goods Agreement (EGA) negotiations in 2016.
Where Are We Now?
Efforts to liberalise trade in environmental goods are ongoing but fragmented. APEC continues to promote tariff reductions within its member economies. Some countries are exploring green trade provisions in bilateral and regional agreements. Others, such as the participants in the Agreement on Climate Change, Trade and Sustainability (ACCTS), are testing new frameworks for integrating environmental priorities into trade.
What’s clear is that environmental goods are essential to the green transition — and that trade policy plays a key role in making them accessible, affordable, and widespread.
EGSTradeHub.org tracks developments in environmental goods classification, trade negotiations, and market trends — helping users understand how trade can support environmental goals.