A second form of leakage is associated with protecting threatened forests, as often is proposed for the tropics. Suppose that a particularly valuable forest is threatened with conversion to agriculture. Intervention may be able to save this forest and thus claim credits for the carbon that is prevented from being emitted. However, such an action might simply deflect the deforestation pressure from one forest to another, with no net reduction in carbon emissions. It should be noted that leakage is not unique to forest sinks.
Potential leakage is pervasive throughout many of the proposed climate remedies.
Consider the proposal to tax carbon emissions from fossil fuels in developed countries as a way to provide financial incentives to assist developed countries in meeting their emission reduction targets. Such a policy would increase energy prices in the developed world and energy-intensive industries would have incentives to move to the developing world, where no emission targets or carbon taxes exist, and hence energy is cheaper. The net effect could be the transfer of emissions from developed countries to developing countries without a significant reduction in global emissions. This leakage in the energy sector could be substantial and could have significant implications for the world economy. Yes, but it would require implementing similar rules across countries so that leakage is not created through circumvention outside a project or outside a particular country.