Industrial and terrestrial carbon leakage under climate policy fragmentation

The study examines how fragmented climate policies, where some regions implement carbon taxes while others do not, lead to 'carbon leakage'—the relocation of emissions to non-participating regions. It distinguishes between industrial carbon leakage (ICL), driven by fossil fuel price changes, and terrestrial carbon leakage (TCL), driven by land-use changes. The findings indicate that TCL is the dominant form of leakage until 2050, primarily due to deforestation in non-participating regions as food and bioenergy production shift away from participating areas. The research concludes that the total leakage rate decreases as the size of the climate coalition increases, but even the most inclusive fragmented scenarios fail to limit global temperature rise to below 2°C by 2100.

• Total carbon leakage rates are inversely related to the size of the climate coalition; the highest rate occurs in the smallest coalition (FR1) at 28% and the lowest in the largest (FR6) at 6% for the 2020-2050 period.
• Terrestrial carbon leakage (TCL) is the primary driver of total leakage up to 2050, with rates ranging from 21% to 93%, significantly exceeding industrial carbon leakage (ICL) rates of 3% to 14% in the same period.
• In the long term (2020-2100), industrial carbon leakage becomes the dominant form of leakage as emissions from land-use change decline after an initial peak between 2020 and 2030.
• Fragmented climate policies trigger a shift in land use where participating regions increase forest area (by 10% to 25% by 2050) while non-participating regions see increases in land dedicated to crops (4% to 40%) and bioenergy (15% to 40%).
• The shift of food and bioenergy production to non-participating regions, combined with the pricing of terrestrial carbon, leads to significant global food price increases, potentially by a factor of 2 to 2.5 by 2050 in scenarios FR5 and FR6, and up to a factor of 7 by 2100 in FR6.
• Fragmented regimes where only developed countries participate result in 2100 temperature increases above 3.4°C; even the most optimistic scenario (FR6) results in a 2.4°C increase, exceeding the 2°C stabilization target.

APA

González-Eguino, M., Capellán-Pérez, I., Arto, I., Ansuategi, A., & Markandya, A. (2016). Industrial and terrestrial carbon leakage under climate policy fragmentation. Basque Centre for Climate Change. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201603311208301529793418.pdf

Chicago

González-Eguino, Mikel, Iñigo Capellán-Pérez, Iñaki Arto, Alberto Ansuategi, and Anil Markandya. Industrial and terrestrial carbon leakage under climate policy fragmentation. Basque Centre for Climate Change, 2016. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201603311208301529793418.pdf.

Wikipedia

{{cite report |last1=González-Eguino |first1=Mikel |last2=Capellán-Pérez |first2=Iñigo |last3=Arto |first3=Iñaki |last4=Ansuategi |first4=Alberto |last5=Markandya |first5=Anil |title=Industrial and terrestrial carbon leakage under climate policy fragmentation |publisher=Basque Centre for Climate Change |date=February 2016 |url=https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201603311208301529793418.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{gonzlezeguino2016industrial, author = {González-Eguino, Mikel and Capellán-Pérez, Iñigo and Arto, Iñaki and Ansuategi, Alberto and Markandya, Anil}, title = {{Industrial and terrestrial carbon leakage under climate policy fragmentation}}, institution = {Basque Centre for Climate Change}, year = {2016}, month = feb, url = {https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201603311208301529793418.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }