Approaches to Carbon Leakage in Carbon Pricing Policies: The Role of Cooperation within the Climate Club and Beyond

Summary

This document addresses the critical challenge of carbon leakage, where ambitious climate policies in one country might lead to the relocation of carbon-intensive production and emissions to jurisdictions with less stringent regulations, potentially undermining global climate goals. It outlines current approaches taken by members of the Climate Club and other major greenhouse gas emitters to mitigate these risks within their carbon pricing policies. The paper emphasizes the need for international cooperation to streamline these measures, reduce inefficiencies, and collectively increase climate ambition, with the Climate Club fostering strategic dialogue towards common principles.

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