Carbon Leakage Detector

The foundational component that strictly defines the organizational and operational perimeter of the analysis. This engine configures the system to distinguish between internal reductions and external increases based on the equity share or control approach.

• Maps Scope 1, 2, and 3 emission sources to specific legal entities and geographies.
• Applies the Emission Inventory Boundary rules to prevent double-counting or omission.
• Enables scenario testing for different regulatory boundaries, such as the EU ETS or a national carbon tax regime.

A statistical module that detects the causal link between a local emission decrease and a foreign emission increase. It analyzes trade flows and production volumes to confirm that a reduction is not genuine but merely geographically displaced.

• Uses Granger causality tests on time-series data of domestic production vs. import volumes.
• Identifies the 'substitution effect' where local demand is met by carbon-intensive imports.
• Flags instances where a facility closure correlates with a spike in activity at a foreign subsidiary.

Quantifies the carbon intensity of imported goods to compare against the displaced domestic production. This module relies on Environmentally Extended Input-Output (EEIO) models and life-cycle databases to estimate the footprint of foreign supply chains.

• Applies Emission Factor Matching to assign accurate CO2e per dollar or per unit of imported product.
• Differentiates between production methods, such as coal-fired vs. renewable-powered manufacturing.
• Calculates the net global delta: (Foreign Emissions Increase) - (Domestic Emissions Decrease).

A surveillance system that tracks the differential in carbon pricing between jurisdictions to predict and detect leakage. It monitors the Internal Carbon Pricing Engine and external policy changes to identify economic incentives for offshoring emissions.

• Compares the Carbon Border Adjustment Mechanism (CBAM) implied cost against the domestic carbon price.
• Alerts when a widening price differential creates a financial incentive to relocate production.
• Analyzes trade route shifts that bypass border carbon tariffs through transshipment.

Tracks the physical movement of carbon-intensive commodities across borders to provide a mass-balance verification of leakage. This method uses Mass Balance Chain of Custody principles to ensure that the total carbon accounted for remains constant globally.

• Reconciles production, consumption, import, and export data for commodities like steel, cement, and chemicals.
• Detects anomalies where a drop in domestic consumption of a carbon-intensive material is not matched by a drop in global production.
• Provides a physical audit trail that complements economic modeling.

Simulates a hypothetical baseline where the carbon policy or abatement action did not occur to isolate the true impact. This module builds a Digital Twin of the market to answer: 'What would emissions have been without the intervention?'

• Constructs a synthetic control group using regions without the policy change.
• Models the Carbon Abatement Curve to distinguish between genuine efficiency gains and output reduction.
• Quantifies the leakage rate as a percentage of the intended domestic reduction that was negated abroad.

The computational process of quantifying indirect greenhouse gas emissions that occur in a company's value chain, both upstream from purchased goods and downstream from product use and disposal. Carbon leakage often manifests within Scope 3 boundaries when production shifts to unregulated regions.

• Category 1 (Purchased Goods) is the most common leakage vector
• Requires supplier-specific emission factors rather than industry averages for leakage detection
• The GHG Protocol provides the foundational accounting standard

The defined organizational and operational perimeter that determines which emission sources and sinks are included in a company's greenhouse gas inventory. Leakage detection requires comparing emissions inside the boundary against those that have migrated outside it.

• Based on either the equity share or control approach
• A narrowing boundary can create the illusion of decarbonization while actual global emissions rise
• Boundary integrity is essential for credible Science-Based Target alignment

An algorithm that identifies and quantifies emission reduction investments made within a company's own supply chain, as opposed to external offsetting. Insetting directly counteracts leakage by decarbonizing the same value chain where emissions originate.

• Differs from offsetting by maintaining reductions within the same system boundary
• Examples include investing in regenerative agriculture for raw material suppliers
• Creates insets that are traceable and non-fungible with generic carbon credits

A comprehensive life-cycle analysis method that accounts for total energy consumption and greenhouse gas emissions from fuel production (well-to-tank) through to combustion in a vehicle (tank-to-wheel). Leakage can occur when only tailpipe emissions are counted, ignoring upstream fuel production shifts.

• Prevents leakage by capturing the full energy supply chain
• Critical for evaluating biofuel and hydrogen claims where upstream emissions may be significant
• Standardized under ISO 14083 for transport chain reporting

A cryptographically secured, immutable record of the origin, chain of custody, and transformation history of an emission data point. Provenance is the technical foundation for detecting leakage, as it prevents double-counting and verifies that claimed reductions are real and permanent.

• Uses distributed ledger technology or verifiable credentials
• Enables auditors to trace an emission factor back to its primary source
• Essential for regulatory-grade carbon accounting under CBAM and SBTi requirements