This　article　uses　the　concept　of　embodied　exergy　as　metrics　in　designing　incentive　policy　instruments　to　tackle　the　inefficiency　of　energy　operations.　Based　on　the　second　law　of　thermodynamics　and　energy＇s　economic　properties　as　both　a　private　commodity　and　a　public　good,　it　maintains　that　energy　can　be　measured　by　separating　the　useful　exergy　embodied　in　a　manufactured　product　from　its　waste　exergy　(anergy)　as　emissions　and　sunk　wastes　in　a　production　process.　It　is　rational　to　benchmark　the　content　of　useful　exergy　embodied　in　products　for　any　incentive　policy　design　to　encourage　green　production.　This　article　uses　trade　data　between　China,　Japan　and　the　EU　countries　to　compare　the　embodied　exergy　and　waste　exergy　embodied　in　traded　manufactured　products.　It　proposes　using　a　negative　value-added　tax　as　an　incentive　instrument　instead　of　full-scale　carbon　tariffs　to　encourage　green　production　and　to　fence　against　carbon　evasion　behaviour.