Carbon Leakage, Consumption, and Trade

Michael Grubb; Nino David Jordan; Edgar Hertwich; Karsten Neuhoff; Kasturi Das; Kaushik Ranjan Bandyopadhyay; Harro van Asselt; Misato Sato; Ranran Wang; William A. Pizer; Hyungna Oh

doi:10.1146/annurev-environ-120820-053625

journal article Open Access Oct 17, 2022

Carbon Leakage, Consumption, and Trade

Michael Grubb

Nino David Jordan Edgar Hertwich Karsten Neuhoff

Kasturi Das Kaushik Ranjan Bandyopadhyay Harro van Asselt Misato Sato Ranran Wang

William A. Pizer Hyungna Oh

Annual Review of Environment and Resources Vol. 47 No. 1 pp. 753-795 · Annual Reviews

View at Publisher Save 10.1146/annurev-environ-120820-053625

Abstract

We review the state of knowledge concerning international CO2emission 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 areneeded. 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.

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Details

Published: Oct 17, 2022
Vol/Issue: 47(1)
Pages: 753-795
License: View

Authors

M

Michael Grubb

UCL Institute for Sustainable Resources, University College London, London, United Kingdom;

N

Nino David Jordan

UCL Institute for Sustainable Resources, University College London, London, United Kingdom;

E

Edgar Hertwich

Department of Energy and Process Engineering, Norwegian University of Science and Technology, Gløshaugen, Norway

K

Karsten Neuhoff

Climate Policy Department, German Institute for Economic Research (DIW Berlin), Berlin, Germany

K

Kasturi Das

Institute of Management Technology, Ghaziabad, Delhi NCR, India

K

Kaushik Ranjan Bandyopadhyay

Indian Institute of Management, Lucknow, Uttar Pradesh, India

H

Harro van Asselt

University of Eastern Finland Law School, University of Eastern Finland, Joensuu, Finland; Copernicus Institute of Sustainable Development, Utrecht University, Utrecht, The Netherlands

M

Misato Sato

Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science, London, United Kingdom

R

Ranran Wang

Institute of Environmental Sciences (CML), Leiden University, Leiden, Netherlands

W

William A. Pizer

Resources for the Future, Washington, DC, USA

H

Hyungna Oh

Kyung Hee University, Gyeonggi, South Korea

Cite This Article

Michael Grubb, Nino David Jordan, Edgar Hertwich, et al. (2022). Carbon Leakage, Consumption, and Trade. Annual Review of Environment and Resources, 47(1), 753-795. https://doi.org/10.1146/annurev-environ-120820-053625

Carbon Leakage, Consumption, and Trade

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