Leakage is defined in 3/CMP.1, Annex, paragraph 51 as follows:
Leakage is defined as the net change of anthropogenic emissions by sources of greenhouse gases which occurs outside the project boundary, and which is measurable and attributable to the CDM project activity (3/CMP.1, Annex, paragraph 51).
Therefore, leakage refers to the increase in emissions outside the project boundary that occurs as a consequence of the project activity's implementation.
The Executive Board provided clarification in EB 5, Annex 3, paragraph 10(d):
In an operational context, the terms “measurable” and “attributable” in paragraph 51 of the CDM modalities and procedures should be read as “which can be measured” and “directly attributable”, respectively (EB 5, Annex 3, paragraph 10(d)).
Leakage emissions must be deducted from the emission reductions generated by the project activity, and certified emission reductions (CERs) are only issued in respect of the net reduction in emissions brought about by the project, once leakage had been taken into account.