Unilateral actions to cut CO2 emissions to worsen the situation?

Nordic Council of Ministers has published a new report called “Carbon Leakage from a Nordic Perspective”, which debates consequences of being a frontrunner in the global climate mitigation effort. The term Carbon leakage term is coined as the risk of energy-intensive industries leaving countries with strict climate policies.

As a conclusion the report states that earlier reports underestimate such a possibility. The report identifies paper mills, steel, chemical and fishing industry firms as those most likely to leave in such an event. Even still the authors recommend increased carbon pricing. They identify various State support measures as potential counters to such.

Economic theory tends to undermine such wrangling and is hardly kind towards carbon taxing unless there is some obvious upper limit that may not be crossed. Unless that is the case, market-based solutions are universally recommended.