The impact of carbon leakage controlling mechanisms on international trade: A review

Abstract

Proposition of Carbon Border Adjustment Mechanism Since the "Kyoto Protocol" came into effect, developed countries have adopted strict policies to control the emission of greenhouse gases, and the topic of carbon leakage mechanism has attracted the attention of scholars. This article reviews the major academic works published in the past decade on carbon leakage and its control mechanisms. The works are categorized into "carbon leakage", "carbon leakage controlling mechanism" and "impacts on international trades" according to their research focuses. Clear patterns regarding transitions of their research focus and methodologies have emerged during the review process. This article revealed that during the past decade the perspective of relevant research has altered from unilateral (domestic) point of view to the multilateral view, the focus has moved from the developed world (the EU in particular) to the developing world (like China and India), and the research method has incorporated more and more quantitative models to gain insights from multi-dimensional data. Despite that this work is neither exhaustive nor vital for unsettling matters of climate bargaining, the review shed light on what can be borrowed, what can be avoided and what requires more trial-and-error attempts to modify and adapt mature climate mechanisms for developing economies like China.