Climate gains via footprint policy for Dutch industry?

With reference to a number of concrete promising options for the energy-intensive industry, this study addresses the question whether climate policy based on the production footprint principle remains attractive once allowance is made for the fact that Dutch society may potentially be paying for carbon emissions reductions in other countries (‘carbon leakage’). The main conclusion is that while such leakage may sometimes occur, there are creative ways to tackle it, particularly within a EU framework.

Addressing climate change not only via site-based policy (production emissions) but also via footprint policy (lifecycle product emissions) has benefits in terms of cost-effectiveness and a level playing field for industry and ties in well with the aims of a circular economy (making a room lighter rather than subsidizing a low-impact light-bulb factory, for example).

For a number of key climate measures in energy-intensive industries, the study assesses what fraction of the gains occur in the Netherlands, what fraction elsewhere in the EU and what fraction in other parts of the world. The leakage (and influx) of the gains of climate policies by various EU member states could, in mutual consultation, be offset against one another.