28 February 2012: The Nordic Council of Ministers has released a report, titled “Carbon Leakage from a Nordic Perspective,” that finds a high risk of carbon leakage, which occurs when industries move from countries with strict regulations to those with less rigorous approaches to addressing climate change.

The report finds that previous studies of carbon leakage by the Organisation for Economic Co-operation and Development (OECD) and the International Energy Agency (IEA) underestimate the potential for carbon leakage as a result of policies such as carbon taxes. Yet despite the risk of carbon leakage, the report concludes that carbon pricing is an important means of addressing climate change and suggests the declining competitive advantage of companies subject to increased carbon pricing could be off-set through support measures.

The report highlights sectors that are particularly vulnerable to carbon leakage, including: paper mills; the steel and iron industry; chemical industries; and fisheries. The report details the drivers and size of carbon leakage, identifies Nordic industries at risk of carbon leakage and approaches to estimating carbon leakage, and presents policy recommendations. [Nordic Council of Ministers Press Release][Publication: Carbon Leakage from a Nordic Perspective]