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Carbon Burden

Author

Listed:
  • Pástor, LuboÅ¡
  • Stambaugh, Robert F.
  • Taylor, Lucian

Abstract

We quantify the U.S. corporate sector's future carbon damages by computing its "carbon burden"---the present value of social costs of its future carbon emissions. Our baseline estimate of the carbon burden is 131% of total corporate equity value. Even with indirect emissions excluded, 13% of firms have carbon burdens exceeding their market capitalizations. The 30 largest emitters account for all the decarbonization of U.S. corporations predicted by 2050. Predicted emission reductions, and even firms' targets, fall short of the Paris Agreement. Carbon burden is priced: firms with higher burdens have higher costs of capital, even controlling for past emissions.

Suggested Citation

  • Pástor, LuboÅ¡ & Stambaugh, Robert F. & Taylor, Lucian, 2024. "Carbon Burden," CEPR Discussion Papers 19668, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19668
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    File URL: https://cepr.org/publications/DP19668
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    Keywords

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    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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