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The report examines the methodology for constructing industrial GHG benchmarks, focusing on the trade-offs between sector-wide and product-specific aggregation, the inclusion of indirect emissions, and the selection of benchmark ambition. It analyzes specific sectors present in Washington—including aluminum, cement, chemicals, food processing, glass, pulp and paper, and steel—and evaluates data sources, noting that mandatory reporting rules are the most promising but that a broader geographic cohort beyond Washington is necessary for robust benchmarks. The document concludes by proposing paths for the Washington State Department of Ecology to implement these benchmarks depending on the ultimate policy context.

The document argues that national-level analyses of carbon leakage underestimate the severe economic risks to Old Industrial Regions (OIRs), where heavy industry is highly concentrated. Using an applied general equilibrium (AGE) model for the Basque Country, the authors find that relocating 1.5% to 35% of iron and steel production could lead to a GDP drop of up to 2.26%. While such relocation reduces CO2 emissions, the implicit cost of this mitigation (187 to 202 €/Tco2) is significantly higher than technological alternatives like carbon capture and storage. The authors recommend that climate policies be carefully designed to avoid imposing undue burdens on sectors prone to relocation in OIRs.

The document analyzes the risk of carbon leakage in the Basque economy, defining vulnerability as a combination of high carbon costs and high trade intensity with non-EU countries. Using 2005 data, it finds that 11 sectors are at risk, representing 4-6% of productive activity and 6.5% of the total Gross Value Added (GVA). Key vulnerable sectors include oil refining and steel, while the majority of the economy (77.4% of GVA) remains unaffected. The author recommends protecting vulnerable sectors while transitioning toward a value-based rather than volume-based production model.

The report examines carbon leakage—the migration of emissions to regions with laxer carbon pricing—specifically focusing on the EU ETS Phase III. It criticizes the European Commission's broad identification of 164 sectors at risk, arguing that the criteria used were too simplistic and failed to account for the 2008 economic recession or the actual auctioning rates. The authors suggest that leakage risk is actually concentrated in a few sectors, including steel, cement, and aluminium, and recommend tailored policy responses such as border adjustments for cement and investment subsidies for aluminium, rather than a one-size-fits-all approach of free allowance allocation.

The report examines how the WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement) creates legal uncertainty for climate mitigation tools. It analyzes specific issues such as carbon allowances, carbon leakage, and renewable energy subsidies, arguing that the current 'benefit' and 'specificity' criteria often fail to account for market failures and historical fossil fuel distortions. The author proposes four alternative legal paths: extending GATT Article XX general exceptions to the SCM Agreement, reviving 'non-actionable' subsidy categories based on Kyoto Protocol goals, broadening environmental goods and services negotiations to include non-tariff measures, or establishing a UNFCCC-driven waiver system.

The document examines how the Japanese steel industry, a major global producer, can engage in climate mitigation under post-2012 frameworks. It contrasts sectoral approaches—which are favored by energy-intensive industries to prevent carbon leakage and maintain competitiveness—with cap-and-trade systems. The author proposes four options for integration: incorporating sectoral approaches into Nationally Appropriate Mitigation Actions (NAMAs) or CDM reforms, establishing agreements outside the UNFCCC, relying on non-binding recognition of commitments, or implementing transnational sectoral trading. It concludes that while the Japanese government's support for sectoral approaches shifted under the Hatoyama administration, the industry continues to support them due to low costs and international competition risks.

The research investigates how asymmetric global climate policies can lead to carbon leakage, specifically the relocation of CO2-intensive industries like iron and steel. Using the Basque Country as a representative Old Industrial Region (OIR), the authors demonstrate that while relocation impacts may be negligible at a national level, they can significantly reduce regional GDP. The study finds that reducing emissions through industrial relocation is far more costly in terms of GDP loss than achieving the same reductions through cost-effective mitigation policies.

The report identifies 'Carbon Fat Cats'—companies that received excessive free emissions permits under Phase 2 of the EU ETS (2008-2012). It finds that the top ten companies held 35 million surplus permits in 2008, valued at €500 million, with projected surpluses reaching 230 million permits (€3.2 billion) by 2012. This over-allocation in industrial sectors like iron, steel, and cement means that a small number of power companies, specifically RWE and EON, must deliver the majority of the scheme's net emissions reductions. The report argues that this creates competitive distortions and undermines climate targets, recommending higher ambition (a 30% cut by 2020), limited access to overseas offsets, and the cancellation of Member State reserves.

The report analyzes how carbon pricing may affect the US Midwest, a region characterized by high carbon intensity due to coal dependency and a large manufacturing base. While carbon pricing could increase short-term costs for energy-intensive industries, the report argues it presents a long-term opportunity for the region to lead in low-carbon production and 'green collar' jobs. It highlights the Midwest's significant mitigation potential and the role of the Midwestern Greenhouse Gas Accord in driving this transition.

The report assesses the impact of carbon pricing on Poland's industrial competitiveness, noting that while Poland has benefited from a favorable 1990 emissions baseline and the EU ETS, certain carbon-intensive sectors remain at risk. Due to significant data constraints, the authors identify six specific sectors for further detailed analysis to prevent carbon leakage and economic loss.

The report examines the steel sector's role in global emissions, specifically focusing on China and India. It identifies six abatement categories, noting that while new plants often meet best available technology (BAT) standards, significant potential remains in closing obsolete plants, improving efficiency in existing facilities, and increasing scrap recycling. The study suggests that a national approach combining carbon pricing with non-price incentives (like investment capital) is more viable than transnational trading. Initial modelling indicates that with a carbon price of $25/tCO2, China could abate up to 150 MtCO2/year and India up to 40 MtCO2/year, potentially generating significant financial flows through credits.

The document examines how a hypothetical carbon price of 3000¥/t would affect Japanese industry, identifying 17 subsectors at risk. While findings align with similar studies in the UK, Germany, and USA, the Japanese pig iron subsector is noted as being disproportionately affected. However, the overall impact on the competitiveness of final products like flat steel is expected to be minimal compared to other trade influences.

The paper analyzes the technical and political requirements for linking cap-and-trade systems in North America, specifically focusing on the U.S., Canada, and Mexico. It argues that while linking reduces overall carbon costs and GDP impacts, it may not significantly mitigate production leakage. The authors identify critical design elements requiring harmonization—such as cap type, offset limits, and enforcement quality—and conclude that divergent national interests make a fully integrated system unlikely, with a minimal U.S.-Canada link and a more significant U.S.-Mexico link being the most probable outcome.

The 2009 Research Highlights from Climate Strategies provides a comprehensive overview of projects addressing the operational challenges of the EU ETS, the feasibility of linking emissions trading schemes, and the design of financial mechanisms for the UNFCCC. It specifically investigates carbon leakage in energy-intensive sectors like cement and steel, the potential for 'Green Investment Schemes' in Central and Eastern Europe, and the implementation of Nationally Appropriate Mitigation Actions (NAMAs) in countries including Ghana, South Africa, Brazil, and India. The document also assesses the impact of carbon pricing on the chemical sector and the evolving climate policy landscape in Russia.

The report examines the EU ETS, concluding that while it successfully reduced emissions and had minimal macroeconomic impact, it faced challenges with price volatility and windfall profits due to free allocation. It argues that competitiveness risks are concentrated in a few carbon-intensive sectors and recommends maximizing auctioning and pursuing multilateral agreements for border adjustments to minimize economic distortions.

The document outlines ten key insights from the EU Emissions Trading System (EU ETS), arguing that while the system is effective at reducing emissions and has a minimal impact on GDP, its design—particularly regarding allowance allocation and carbon leakage—requires careful calibration to avoid economic inefficiencies and 'windfall profits'. It recommends a phased approach to system improvement and a gradual shift toward auctioning allowances to maximize economic rationality and fund low-carbon innovation.

The document examines 'carbon leakage'—where EU production moves to non-EU territories lacking carbon pricing—and critiques the European Commission's broad identification of 'at risk' sectors. While the EU ETS aims to stimulate low-carbon investment, the author argues that excessive free allocation of allowances may undermine the carbon price signal and encourage lobbying. The briefing suggests a more targeted screening process for high-emitters and proposes a portfolio of measures, including border adjustments based on CO2 emissions and sectoral agreements, to maintain competitiveness without sacrificing climate goals.

The document examines climate change as a global challenge characterized by scientific uncertainty and long-term impacts. It frames the issue as a 'market failure' resulting from negative externalities, where the costs of greenhouse gas emissions are not internalized. The authors discuss the economic costs of mitigation versus inaction, the ethical implications of discount rates and inter-generational equity, and the potential for 'carbon leakage' in international trade. It emphasizes the necessity of combining mitigation and adaptation strategies, the critical role of R&D and technology transfer to developing nations, and the importance of international agreements like the Kyoto Protocol and the 2009 Copenhagen Summit (CoP 15).

The report examines carbon leakage risks for energy-intensive industries—specifically cement, steel, and aluminium—when facing unequal global carbon prices. It evaluates tools such as free allocation of emission rights and border adjustments, noting that while free allowances can reduce leakage, they may distort carbon price signals and reduce incentives for low-carbon investment. The analysis suggests that border adjustments are particularly suitable for the cement sector due to the homogeneity of production technologies and carbon intensity across regions.

The report examines the economic and environmental impacts of carbon pricing on industrial competitiveness and the risk of carbon leakage, where emissions shift to jurisdictions with less stringent policies. It analyzes six policy options—border taxes, mandatory allowance purchases, embedded carbon product standards, aid to industry, free allowances, and sectoral approaches—concluding that while border carbon adjustments (BCAs) are theoretically more effective at reducing leakage in specific sectors, they face significant technical, administrative, and WTO legal challenges. The document emphasizes that only a small fraction of GDP (typically less than 1%) is truly at risk, primarily in energy-intensive, trade-exposed sectors like cement, steel, and aluminum.