1. Introduction

This study analyses the potentials and consequences of a change from the current system of a production-based policy orientation in international climate policy to one that is consumption-based. Such a change has been suggested by some authors as a way to improve the global effectiveness of unilateral climate policies followed by industrialized countries. The central research question of this study is whether this indeed is the case. In this introductory chapter, four arguments for adopting consumption-based policies are introduced: such policies currently include a larger share of global emissions; they bring the export sector of emerging economies, which often still offers opportunities for comparatively cheap abatement, into the scope of the policy; they may reduce carbon leakage; and they may help to overcome political opposition to an ambitious climate policy. Then the methodology, structure, and the research objectives of the study are laid out: The first part of the study reviews the economic, legal, and political background and the often contradictory findings on consumption-based approaches in the current literature. The second part investigates—with the help of an analytical model—the effects of different policy variants on environmental effectiveness, cost-effectiveness, carbon leakage, competitiveness and the global distribution of income. The third part attempts to answer the question whether consumption-based approaches are a concept that only works in the idealized setting of stylized analytical models, or whether such policies could prove useful also under “real-world” circumstances. Several criteria and options for practical policy design are discussed.