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Carbon leakage, consumption, and trade

Grubb, Michael, Jordan, Nino David, Hertwich, Edgar, Neuhoff, Karsten, Das, Kasturi, Bandyopadhyay, Kaushik Ranjan, Van Asselt, Harro, Sato, Misato ORCID: 0000-0002-9978-9595, Wang, Ranran, Pizer, Billy and Oh, Hyungna (2022) Carbon leakage, consumption, and trade. Annual Review of Environment and Resources, 47 (1). 753 - 795. ISSN 1543-5938

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Identification Number: 10.1146/annurev-environ-120820-053625


We review the state of knowledge concerning international CO 2 emission transfers associated particularly with trade in energy-intensive goods and concerns about carbon leakage arising from climate policies. The historical increase in aggregate emission transfers from developing to developed countries peaked around 2006 and declined since. Studies find no evidence that climate policies lead to carbon leakage, but this is partly due to shielding of key industrial sectors, which is incompatible with deep decarbonization. Alternative or complementary consumption-based approaches are needed. Private sector initiatives to trace and address carbon emissions throughout supply chains have grown substantially but cannot compensate for inadequate policy. Three main price-based approaches to tackling carbon leakage are potentially compatible with international trade rules: border adjustments on imports, carbon consumption charges, and climate excise contributions combined with emissions trading. We also consider standards and public procurement options to tackle embodied emissions. Finally, we discuss proposals for carbon clubs involving cooperation among a limited set of countries.

Item Type: Article
Official URL:
Additional Information: © 2022 Annual Reviews.
Divisions: Grantham Research Institute
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
Date Deposited: 21 Sep 2022 11:48
Last Modified: 14 Jun 2024 20:45

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