Review of carbon leakage under regionally differentiated climate policies

Abstract

Despite the increasing challenges of coping with global climate change, current climate policy is still implemented unilaterally at national and subnational levels, with different forms and intensities in both time and space dimensions. Such regionally differentiated climate policies inevitably cause carbon leakage phenomenon, that is, reduced carbon emissions in abating areas may be offset to some extent by increased carbon emissions in non-abating areas. The occurrence of carbon leakage could undermine the environmental effectiveness of implemented climate policies and cause extra emission reduction costs. Studying carbon leakage is vital not only to the effective formulation, implementation, and evaluation of climate policy, but also to the fair sharing of international emission reduction responsibilities. To understand how this important issue has been discussed, this paper systematically reviewed the research shedding light on carbon leakage. Taking the questions of how carbon leakage happens, what are the key influencing factors, how to evaluate it and where does the heterogeneity of results come from as the story line, we investigated the main mechanism of carbon leakage and the factors influencing it, the distribution of carbon leakage across countries, measurement methods and results through the bibliometric analysis and meta-analysis. On the basis of this, three aspects of improvements worthy of further study were proposed.

Keywords: Border carbon adjustment; Carbon leakage; Differentiated climate policies; Emissions accounting principles; Measurement methods; Mechanism of carbon leakage.