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Carbon leakage – where multinational enterprises (MNEs) transfer carbon-intensive production activities to countries with laxer emissions constraints for cost purposes – is one of the main mechanisms through which international business (IB) contributes to climate change. This chapter discusses a new policy initiative called the Carbon Border Adjustment Mechanism (CBAM) that the European Union (EU) introduced in May 2023 to fight carbon leakage. The authors analyze the logic of CBAM and discuss how it will likely influence IB both in industries that are directly targeted by CBAM and related industries that will face spillover effects.

Fighting climate change and COVID, which is currently done at the international level through the use of public goods based on subscriptions, is the case for charitable organisations within states. Such institutions lead to equilibrium situations that are clearly inefficient (not Pareto optimal). They also raise difficult questions of equity between developed, developing and emerging countries: If we want to promote more effective ways of fighting climate change or COVID type epidemics, how can we achieve such important goals at the global level without jeopardising the growth of poorer countries and making them still poorer? We will show that this is actually possible within certain limits. It will require the formation of broad-based climate or COVID coalitions that will be able to influence outsiders and force them to cooperate by sanctioning those who want to take advantage of carbon leakage. Such sanctions could take the form of carbon tariffs and other pressure measures. The result should be a solution that benefits both developed and developing countries while achieving global public goods that are efficient at the same time.

During the Paris Convention, Korean Government made commitment to curb carbon emission by 37 percent by the year of 2030. Since then there has been constant debate, both in media and academia, as to whether attempts to reduce carbon emission would spell the concomitant economic slowdown. The purpose of this paper is to build a Computable General Equilibrium (CGE) model to see the effects of emission decrease on Korea economy.

To answer the above question, we build a comprehensive framework to gauge the economic impact of Paris Convention through the lens of Computable General Equilibrium (CGE) model using Armington and Melitz model.

Contrary to conventional wisdom, Korea’s economic performance in terms of welfare remains robust when the carbon emission is reduced. Broadly speaking, Korea’s welfare does not contract significantly in part due to expansion at the export market. For instance, the energy intensive industry (EIT) is affected most directly from the Paris Convention commitment and yet it experiences growth in export. On the contrary, the authors find that the general economic impact on Korea’s output is negative. The additional experiment using Melitz model shows that as the carbon reduction is enforced, both the number and the average productivity of the exporting firms increase in the EIT sector, which the authors refer in the paper as the “Melitz Effect.”

This paper shows that what can be occurred in Korean industries by emission decrease commitment.

One byproduct from restricting carbon emission is the surge in the electricity price. This is due to the fact that industries have to shift away from traditional fuels such as oil to electricity for energy. Therefore the authors propose that industrial policies aimed at balancing electricity price should accompany the plan to reduce carbon emission.

For Korean economy, the effects of emission reduction is researched using Armington and Melitz model at the same time. Especially, this is the first research case using the Melitz model in this Korean topic.

Under the carbon tax policy, the authors examine the operational decisions of the low-carbon supply chain with the triple bottom line.

This paper uses the Stackelberg game theory to obtain the optimal wholesale prices, retail prices, sales quantities and carbon emissions in different cases, and investigates the effect of the carbon tax policy.

This study’s main results are as follows: (1) the optimal retail price of the centralized supply chain is the lowest, while that of the decentralized supply chain where the manufacturer undertakes the carbon emission reduction (CER) responsibility and the corporate social responsibility (CSR) is the highest under certain conditions. (2) The sales quantity when the retailer undertakes the CER responsibility and the CSR is the largest. (3) The supply chain obtains the highest profits when the retailer undertakes the CER responsibility and the CSR. (4) The environmental performance impact decreases with the carbon tax.

The results of this study can provide decision-making suggestions for low-carbon supply chains. Besides, this paper provides implications for the government to promote the low-carbon market.

Most of the existing studies only consider economic responsibility and social responsibility or only consider economic responsibility and environmental responsibility. This paper is the first study that examines the operational decisions of low-carbon supply chains with the triple bottom line under the carbon tax policy.

The European Union's Emissions Trading System (EU ETS), which is already one of the EU's most impactful instruments for reducing greenhouse gases (GHGs), will soon include the maritime transport industry. Although ports are this industry's most environmental-friendly component, there are still some barriers to including ports in the system. Therefore, the purpose of the study is to identify these barriers and to reveal the barriers' interrelationships.

The study was conducted by identifying barriers from a literature review before analyzing the barriers with the Fuzzy DEMATEL method. Finally, based on the Complex Adaptive System Approach, various solutions are proposed to overcome these barriers.

The identified barriers were grouped into cause-and-effect groups. Two barriers, namely long payback period and high investment costs, were evaluated as triggers of the model while the others were more sensitive to the model.

This study only includes the perceptions of green certificated ports in Türkiye. The results revealed an expectation that elimination of financial concerns will alleviate other barriers to including ports in the system. The study's findings can guide port managers on the integration of the managers' processes into the system.

This study provides novel findings regarding the relationships between barriers hindering ports from involvement in the EU ETS.

The author examine the sequestration of CO₂ in abandoned geological formations where leakages are permitted up to only a certain threshold to meet the international CO₂ emissions standards. Technically, the author address a Bayesian experimental design problem to optimally mitigate uncertainties and to perform risk assessment on a CO₂ sequestration model, where the parameters to be inferred are random subsurface properties while the quantity of interest is desired to be kept within safety margins.

The author start with a probabilistic formulation of learning the leak-age rate, and the author later relax it to a Bayesian experimental design of learning the formations geo-physical properties. The injection rate is the design parameter, and the learned properties are used to estimate the leakage rate by means of a nonlinear operator. The forward model governs a two-phase two-component flow in a porous medium with no solubility of CO₂ in water. The Laplace approximation is combined with Monte Carlo sampling to estimate the expectation of the Kullback–Leibler divergence that stands for the objective function.

Different scenarios, of confining CO₂ while measuring the risk of harmful leakages, are analyzed numerically. The efficiency of the inversion of the CO₂ leakage rate improves with the injection rate as great improvements, in terms of the accuracy of the estimation of the formation properties, are noticed. However, this study shows that those results do not imply in any way that the learned value of the CO₂ leakage should exhibit the same behavior. Also this study enhances the implementation of CO₂ sequestrations by extending the duration given by the reservoir capacity, controlling the injection while the emissions remain in agreement with the international standards.

Uncertainty quantification of the reservoir properties is addressed. Nonlinear goal-oriented inverse problem, for the estimation of the leakage rate, is known to be very challenging. This study presents a relaxation of the probabilistic design of learning the leakage rate to the Bayesian experimental design of learning the reservoir geophysical properties.