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Carbon leakage discussed here refers to the increase of carbon emissions outside a country (or a region) with an ambitious carbon pricing regime, such as an emissions trading scheme (ETS) or a carbon tax. There are three channels through which carbon leakage is affected, i.e. the energy price channel, the trade leakage channel (or the competitiveness leakage channel) and the technology and policy spillover channel. Compared to the first two channels, which would lead to the increase of carbon leakage, the third channel is an effective approach to reduce the potential carbon leakage. Particularly, the technology spill-over channel plays an important role in preventing and combating carbon leakage. As probably the most relevant conventional policy tool to environmentally sound technologies (ESTs), patent law is expected to play an important role to facilitate the reduction of carbon leakage. However, the role of patent law in the context of climate change has always been controversial; the overprotection of patents dominated by developed countries has especially been regarded as an impediment of transfer of ESTs to developing countries. Therefore, justification of patent's role in the case of carbon leakage has become a theme of debate in current legal scholarship. This article is formed in this context. It first makes a brief introduction to the three channels affecting carbon leakage. Based on this introduction, the policy functions of patent law will be discussed to justify the patent's importance in combating carbon leakage. Beyond the orthodox view, an unconventional perspective is introduced in this article. Subsequently, one aspect among many proposals regarding the protection scope of patent will be suggested relating to the carbon leakage issue. Finally, a conclusion is given to present the opinions of the authors.
This document has been peer reviewed.