Policy solutions for addressing carbon leakage: Insights from meta-regression analysis

Abstract

Carbon leakage has become a key issue in global climate initiatives. This study aims to examine the effectiveness of various policy solutions for mitigating carbon leakage, as explored extensively in the literature. Employing a meta-regression analysis, this paper analyzes 416 leakage ratio estimates extracted from 39 economic studies published in English and Chinese between 2004 and 2022. These estimates evaluate the effects of diverse climate policies and modeling assumptions on carbon leakage. The results confirm that both ‘intra-region’ and ‘cross-border’ anti-leakage policies significantly impact carbon policy regions. The findings imply to policymakers that, although the implementation of border carbon adjustments provokes international debate under current WTO regulations, the ‘intra-region’ policies, which are more politically feasible, can achieve comparable effectiveness.