J. Environ. Econ. Manage. http://dx.doi.org/10.1016/j.jeem.2011.10.005 (2011)

The Kyoto Protocol, which came into force in 2005, was the first multilateral attempt to cap carbon emissions. Its effects on national emissions are debatable, however, because it may encourage so-called carbon leakage, in which carbon-intensive production is relocated outside national borders.

Rahel Aichele and Gabriel Felbermayr of the University of Munich, Germany, compiled a set of annual data on the carbon footprint — the sum of domestic carbon emissions and net emissions embodied in trade — of 40 countries from 1995 to 2007. Their model allowed them to isolate the impact of the protocol commitments on domestic emissions from the impact on the overall carbon footprint. The researchers also estimated the impact of the protocol on the carbon-import ratio — the amount of emissions embodied in imports relative to domestic emissions. An increase in the ratio indicates that carbon leakage has occurred.

They found that, on average, the Kyoto commitments have reduced domestic emissions by 7%, but the carbon-import ratio increased on average by about 14%. This implies a substantial relocation of carbon-intensive production; carbon leakage cancelled out the domestic savings, rendering carbon footprints unchanged.