---
title: Carbon Leakage
description: "Avoid carbon leakage: When strict rules drive production abroad, increasing global emissions."
---

[Glossary ](https://www.o2oh.com/glossary)

# [Carbon Leakage](https://www.o2oh.com/glossary/carbon-leakage)

 Written by [one to ONE Holdings](https://www.o2oh.com/glossary/author/one-to-one-holdings) | Jan 16, 2026 12:27:29 AM

Carbon leakage occurs when strict environmental rules in one jurisdiction inadvertently cause production to shift to nations with less stringent carbon standards.

In [**hard-to-abate sectors**](https://www.o2oh.com/glossary/hard-to-abate-sectors) like steel, high domestic carbon costs can drive investment abroad to avoid financial penalties. This creates a "leakage" where global emissions remain unchanged or even increase, while the regulating nation suffers industrial decline.

 

<https://www.o2oh.com/hs/cta/wi/redirect?encryptedPayload=AVxigLLTp19FUbjBk646NzeVoHA0%2FEVFYUEejZubtaC%2FSHTgpJj0y1fVvsNfylLNr65eg6%2FM8yfm6H8kNTPntokszF5QOClC1TvfaAD7D3tJ0ZKadeFCbVFnB3n0NFL8AAG4NCM2dPEZPYcpl8xoIPnr0k9r6uQF%2Fx2GVFSz4DQGoNTPfHW1Z4IRuTKYQG5x60mK%2BXXrIxc51PmLrpajPXP%2BjGyShfWPF4CQ66V057BQ0gndP4DK2dVKAUIV&webInteractiveContentId=199457839260&portalId=8005843>

[View full post](https://www.o2oh.com/glossary/carbon-leakage)

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