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Carbon leakage is 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 This effect is particularly visible for countries. As nations strive to reduce their carbon emissions in an uneven global climate policy environment, there is a growing need for policies that successfully incentivize rapid decarbonization while.

Countries around the world have varying greenhouse gas emissions policies to help limit climate change, with some stricter than others While such taxes reduce territorial emissions, they do not seem to influence a country's total consumption emissions Carbon leakage refers to a situation where a company decides to move their production from a country with stringent policies, to a country that is more lenient, leading to an increase in greenhouse gas emissions.

Conflicting evidence has been presented on carbon leakage, caused largely due to misconceptions over the term's meaning

The confusion is worth disentangling because it is obscuring the debate on how to act, argue misato sato and josh burke. Carbon leakage refers to the situation that may occur if, for reasons of costs related to climate policies, businesses were to transfer production to other countries with laxer emission constraints This could lead to an increase in their total emissions Carbon leakage is the shift of emissions from countries with strict environmental policies to those with more lenient regulations

Whether carbon leakage will turn into a major concern for climate change mitigation depends on the stringency of climate policies in different world regions If climate efforts remain at a relatively modest overall level, or if all countries adopt stringent climate targets, leakage seems unlikely to become a major obstacle for climate policy. Climate change is a collective action problem that requires substantial international cooperation This column presents new evidence that carbon taxes, a primary tool to combat climate change, are undermined by 'leakage'

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