Leakage is defined in the Guidance on criteria for baseline setting and monitoring as follows:
Leakage is the net change of anthropogenic emissions by sources and/or removals by sinks of GHGs which occurs outside the project boundary, and that can be measured and is directly attributable to the JI project (Guidance on criteria for baseline setting and monitoring, JISC 4, Annex 6, paragraph 14).
Therefore, leakage refers to the increase in emissions or reductions in removals by sinks outside the project boundary that occurs as a consequence of the project activity's implementation.
Project participants must undertake an assessment of the potential leakage of the proposed JI project and explain which sources of leakage are to be calculated, and which can be neglected. Leakage to be included shall be quanitified and a procedure provided for an ex ante estimate (Guidance on criteria for baseline setting and monitoring, JISC 4, Annex 6, paragraph 15).
For small-scale projects, however, only leakage within the boundaries of non-Annex I Parties need to be considered, if there is any:
Leakage only has to be considered within the boundaries of non-Annex I Parties, if applicable (Guidelines for users of the joint implementation project design document form for small-scale projects and the form for submission of bundled joint implementation small-scale projects (version 02), JISC 6, Annex 2, Glossary).
For LULUCF projects, the displacement of pre-project emissions from sources only needs to be taken into account if the emissions from the displaced location are greater than pre-project conditions:
In the case of JI LULUCF projects, only the increased anthropogenic emissions by sources and/or reduced anthropogenic removals by sinks of GHGs outside the project boundary shall be taken into account (Guidance on criteria for baseline setting and monitoring, JISC 4, Annex 6, paragraph 14).
For example, if an afforestation project activity displaces agricultural activities from the project site to another site, then the agricultural emissions at the new site must only be accounted for as leakage from the project if:
- the agricultural emissions (at the new site) are greater than before; and
- this increase resulted from the implementation of the project activity.
However, decreases of carbon stocks in carbon pools outside the project boundary are to be included as leakage. That is to say, if a project activity causes deforestation outside the project boundary, this is to be included in calculations as leakage from the project.