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National Climate Policies and Corporate Internal Carbon Pricing

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  • Nuno Bento, Gianfranco Gianfrate, and Joseph E. Aldy

Abstract

While national governments pledged to reduce their greenhouse gas emissions under the Paris Agreement, delivering on these aims will require significant changes in the activities of major sources of emissions such as companies. To drive such changes, companies will need to consider carbon emissions as a cost of production and many companies have begun doing so through internal carbon pricing. By employing data from the Carbon Disclosure Project, we evaluate how national carbon pricing policies influence firm-level internal carbon pricing and corporate emission targets. We find that firm-level internal carbon prices are significantly higher in countries explicitly pricing carbon through tax and/or cap-and-trade programs. These findings shed light on how companies are factoring climate change in their decision-making and on the drivers that can contribute to the generalization of climate pricing in the economy.

Suggested Citation

  • Nuno Bento, Gianfranco Gianfrate, and Joseph E. Aldy, 2021. "National Climate Policies and Corporate Internal Carbon Pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    • Handle: RePEc:aen:journl:ej42-5-bento
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    Cited by:

    1. Wen-Hsien Tsai & Wei-Hong Lin, 2024. "Production Decision Model for the Cement Industry in Pursuit of Carbon Neutrality: Analysis of the Impact of Carbon Tax and Carbon Credit Costs," Sustainability, MDPI, vol. 16(6), pages 1-22, March.
    2. Trinks, Arjan & Mulder, Machiel & Scholtens, Bert, 2022. "External carbon costs and internal carbon pricing," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    3. Riedel, Franziska & Gorbach, Gregor & Kost, Christoph, 2021. "Barriers to internal carbon pricing in German companies," Energy Policy, Elsevier, vol. 159(C).

    More about this item

    JEL classification:

    • F0 - International Economics - - General

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