Achieving the objectives of the Paris Agreement requires a rapid and sustained reduction of global greenhouse gas (GHG) emissions over the coming decades. While countries differ in their responsibilities and capabilities, there is broad recognition that more ambitious climate mitigation measures are needed to meet global climate goals.
In the absence of international coordination, however, differences in the stringency and design of climate policies can generate unintended spillovers and constrain ambition. Higher compliance costs associated with mitigation measures, such as carbon pricing policies, may raise production costs for domestic firms, allowing imports from jurisdictions with less stringent regulations to compete at lower cost. This dynamic can weaken public and industry support for climate action. Policy asymmetries are also related to the risk of carbon leakage, i.e., the relocation of emissions from one jurisdiction to another due to carbon pricing or environmental regulation, particularly in emissions-intensive, trade exposed (EITE) industries.
In this context, many countries have introduced measures to address carbon leakage alongside domestic climate policies. These include free allocation of allowances under emissions trading systems (ETSs), industrial subsidies, public procurement rules, and, more recently, border carbon adjustments (BCAs). While such measures are intended to preserve policy space for countries seeking to move ahead with ambition, they have also raised concerns regarding fairness, administrative complexity, and uneven trade and development impacts. As BCAs move from design to implementation, most notably the EU’s Carbon Border Adjustment Mechanism (CBAM) which entered into force in early 2026, debates in international climate and trade fora, including the WTO and COP30 in Belém, have intensified. At the same time, the Belém Declaration on Global Green Industrialization[1] and launch of the Open Coalition on Compliance Carbon Markets[2] at COP30 are recent examples of initiatives that aim to advance international cooperation on industrial decarbonisation and policy convergence.
To facilitate constructive dialogue around shared objectives, concerns, and opportunities for coordination, this Wilton Park event convened policymakers, experts and civil society representatives from around the world for three days of focused discussion on how to work together to address carbon leakage risk and accelerate industrial decarbonisation efforts globally.
[1] https://www.unido.org/sites/default/files/files/2025-11/COP30_Belem%20Declaration%20on%20Global%20Green%20Industrialization_Final%20%281%29.pdf?_token=1231317939
[2] https://www.gov.br/mre/pt-br/canais_atendimento/imprensa/notas-a-imprensa/declaracao-sobre-a-coalizao-aberta-de-mercados-regulados-de-carbono/OpenCoalitiononComplianceCarbonMarkets.pdf