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The above result relies only on the EU being a net importer of CO2 emissions embodied in international trade. It does not rely on the answer to the question, whether stronger unilateral CO2 mitigation efforts in the EU cause the imports of embodied carbon to increase direct carbon leakage.

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Direct carbon leakage refers to the possibility that stringent unilateral CO2 policies in the EU, e. Ex Mase kauplemise susteem evaluations of existing carbon policies arrive at mixed conclusions. On the one hand, emission pricing in the EU ETS, so far, is mostly not found to cause direct carbon leakage.

On the other hand, studies based on a broader focus of climate policies not just carbon prices suggest that measures, e.

Mase kauplemise susteem

Ex-ante predictions by simulation models indicate that direct leakage is indeed likely. However, the range of estimates is very large.

Mase kauplemise susteem

In most studies, indirect carbon leakage that operates through global markets for fossil fuels, however, is quantitatively more important than direct carbon leakage operating through international markets for goods and services. Ex-ante models show that carbon border adjustment can reduce carbon leakage. In complete setups, it can fully eliminate direct leakage.

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Mase kauplemise susteem does little to reduce leakage through energy markets, or to incentivise countries to engage into more ambitious climate policies. Results depend crucially on the design of the mechanism.

Mase kauplemise susteem

Moreover, simulations also show that the adjustment burden is shifted to non-abating countries, many of which are poor and underdeveloped. The note concludes that carbon leakage is an empirically relevant concern. Carbon border adjustments CBAs can lower carbon leakage occurring through goods markets.

Mase kauplemise susteem

CBAs need to be treated very carefully because they might provoke retaliation by non-committed countries and because they may shift the burden of adjustment to poor countries. In the context of the EU ETS, one promising strategy could be to grant free allocations of emission permits to leakage-prone industries but combine this with a consumption tax, applied to domestic and foreign goods produced by those exempted industries.

Mase kauplemise susteem