Global Warming: Addressing Competitiveness and Carbon Leakage

For the foreseeable future, the international climate regime will include some countries that execute emissions commitments on an economy-wide basis and others that take more limited action. This distinction is already raising some tricky political concerns, particularly the fear that the resulting costs will cause the off-shoring of industrial activity and the associated "leakage" of carbon emissions from regulated to unregulated jurisdictions. The author explores a range of viable policy options for addressing these concerns. This book starts with a comprehensive "bottoms-up" assessment of the industries most likely to be affected, how impacts vary between countries given differences in the carbon-intensity of production, and how attaching a price to carbon would change global industry allocation and influence international trade flows. Based on this foundation, it assesses the effectiveness of a number of international policy approaches in addressing emissions leakage.