Leakage (carbon)
ESG & GovernanceAn increase in emissions elsewhere caused by a project or policy that cuts emissions in one place.
In carbon credits, leakage happens when protecting one forest pushes logging to another. In carbon pricing, "carbon leakage" means production moving to countries without a carbon price, which is the reason for the EU's CBAM. Credit standards deduct estimated leakage from the credits issued; policies use free allocation or border adjustments to limit it.
Related terms
From the research
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