This chapter examines the phenomenon of carbon leakage, which is an increase in carbon emissions as a result of businesses moving to other states without carbon reduction measures. Pursuant to the commitments established by the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol, many developed states imposed numerous greenhouse gas emission (GHG) targets, while most developing countries have not adopted any carbon reduction measures. Carbon leakage remains an area of great concern to states and industries seeking to reduce carbon emissions, as it has the potential to undermine the effectiveness of carbon reduction measures and hurt the competitiveness of the industries that decide to remain in those states. The chapter outlines the measures taken to combat carbon leakage. Specifically, it highlights carbon leakage prevention measures under the European Union Emissions Trading Scheme and under similar carbon regulation measures in South Africa and the United States.