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Factoid: Carbon Leakage

July 18, 2016

Summer 2016

The lexicon surrounding energy and climate change issues never stops growing. A recent addition is “carbon leakage”, which may occur due to the difference in the strictness of climate policies between two nations.

A carbon-heavy industry (e.g., cement production) may seek to cut its operating costs by moving to a country that charges less (or nothing) for greenhouse gas (GHG) emissions. The same thing may happen indirectly where electricity pricing is higher due to efforts to cut carbon from power production. An electric-intensive facility (e.g., aluminum processing) may relocate to a country where power is cheaper due to its lack of emissions controls.

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Luthin Associates

Written by Luthin Associates

Founded in 1994, Luthin Associates provides energy advisory services to all industry sectors in the New York Tri-state region and beyond. In 2019, Luthin Associates joined forces with 5, an innovative energy advisory firm comprised of energy innovators, commodity traders, analysts, engineers, and former energy supplier executives. As part of the 5 family of companies, Luthin Associates provides strategic advice on energy-related matters including procurement, demand-side management, rate optimization, regulatory intervention, benchmarking, bill auditing, RFP management, sustainability planning services, renewable power, and distributed generation.