Carbon leakage

Carbon leakage a concept to quantify an increase in greenhouse gas emissions in one country as a result of an emissions reduction by a second country with stricter climate change mitigation policies.[1][2] Carbon leakage is one type of spill-over effect. Spill-over effects can be positive or negative;[3] for example, emission reductions policy might lead to technological developments that aid reductions outside of the policy area. Carbon leakage is defined as "the increase in CO2 emissions outside the countries taking domestic mitigation action divided by the reduction in the emissions of these countries."[4] It is expressed as a percentage, and can be greater or less than 100%. There is no consensus over the magnitude of long-term leakage effects.[5]

Carbon leakage may occur for a number of reasons: If the emissions policy of a country raises local costs, then another country with a more relaxed policy may have a trading advantage. If demand for these goods remains the same, production may move offshore to the cheaper country with lower standards, and global emissions will not be reduced.

If environmental policies in one country add a premium to certain fuels or commodities, then the demand may decline and their price may fall. Countries that do not place a premium on those items may then take up the demand and use the same supply, negating any benefit.

  1. ^ Andrés Cala (18 November 2014), "Emissions Loophole Stays Open in E.U.", The New York Times, retrieved 1 April 2015
  2. ^ Naegele, Helene; Zaklan, Aleksandar (2017). "Does the EU ETS Cause Carbon Leakage in European Manufacturing?". SSRN Electronic Journal. doi:10.2139/ssrn.3050323. hdl:10419/171309. ISSN 1556-5068.
  3. ^ IPCC (2007), B. Metz; et al. (eds.), Glossary A-D. In (section): Annex I. In (book): Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (PDF), Cambridge University Press, Cambridge, U.K., and New York, N.Y., U.S.A., archived from the original (PDF) on 2018-08-20, retrieved 2010-04-18
  4. ^ Barker, T.; et al. (2007), B. Metz; et al. (eds.), 11.7.2 Carbon leakage. In (book chapter): Mitigation from a cross-sectoral perspective. In (book): Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Print version: Cambridge University Press, Cambridge, U.K., and New York, N.Y., U.S.A.. This version: IPCC website, archived from the original on 2010-05-03, retrieved 2010-04-05
  5. ^ Goldemberg, J.; et al. (1996). J.P. Bruce.; et al. (eds.). Introduction: scope of the assessment. In: Climate Change 1995: Economic and Social Dimensions of Climate Change. Contribution of Working Group III to the Second Assessment Report of the Intergovernmental Panel on Climate Change (PDF). This version: Printed by Cambridge University Press, Cambridge, U.K., and New York, N.Y., U.S.A.. PDF version: IPCC website. pp. 27–28. ISBN 978-0-521-56854-8.