Measures to reduce domestic carbon emissions at home can impose costs and regulatory requirements on businesses that aren't shared by their international competitors. This can encourage production to move from countries with high emissions reduction standards to countries with low standards - ie carbon leakage. The EU's Carbon Border Adjustment Mechanism (CBAM) is how the EU has tried to address this issue and level the playing field.

In this episode of Trade Polic Decoded, Pru and Peter talk to Professor Frank Jotzo from the Australian National University about his work leading the Australian Government's review of the potential for carbon leakage in Australia. Will Australia introduce its own CBAM? Only Minister Bowen knows but Frank and his team's review provide some useful indicators.