Carbon leakage refers to the situation where, due to the additional costs imposed by climate policies, economic activity or traffic shifts from regions with stricter emission constraints (such as the EU) to regions with laxer rules, leading to an increase in greenhouse gas emissions outside the regulated area.
In the transport sector—particularly aviation and maritime—this risk is significant because operators can reroute flights or shipping services through non-EU hubs to avoid compliance with measures like the EU Emissions Trading System (EU ETS), ReFuelEU Aviation, or FuelEU Maritime. Such diversions undermine the environmental integrity of EU policies, dilute decarbonisation efforts, and can even increase global emissions by lengthening routes. Addressing carbon leakage is therefore critical to ensure that ambitious climate measures in transport deliver real emission reductions rather than simply displacing emissions geographically, while also safeguarding competitiveness and connectivity in the EU.
The overall methodology encompasses the identification of representative case studies of routes and hubs at risk of carbon leakage, distinguishing between carbon leakage stemming from pricing and other types of environmental measures. The assessment will further identify the routes and hubs at risk of loss of competitiveness, not associated with carbon leakage.
Secondly, a natural next step will be to propose and assess mitigating measures where carbon leakage and loss of competitiveness risks are identified. The assessment of mitigating measures will include the following measures for the respective sectors:
For both aviation and maritime: (a) extension of the EU’s Carbon Border Adjustment Mechanism (CBAM) to transport services and (b) creation of an EU climate levy linked to an EU fund
For aviation only: (c) similar levels of carbon pricing on different global routes, (d) provision of targeted European Union Emissions Trading System (EU ETS), (e) potential changes to the taxation system, (f) capacity building in third countries, (g) potential measures in Air Services Agreements
The study has DG move as client and has focused on identifying routes and hubs at risk of carbon leakage, illustrated by a selection of representative case studies, and identify and assess the feasibility of mitigating measures.
Partners - TIS (leader); Panteia; Oeko-Institut; Wurzburg University