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National Climate Policies and Corporate Internal Carbon Pricing

Author

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  • Nuno Bento
  • Gianfranco Gianfrate
  • 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 & Joseph E. Aldy, 2021. "National Climate Policies and Corporate Internal Carbon Pricing," The Energy Journal, , vol. 42(5), pages 89-100, September.
    • Handle: RePEc:sae:enejou:v:42:y:2021:i:5:p:89-100
    DOI: 10.5547/01956574.42.5.nben
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    References listed on IDEAS

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    1. Joseph E. Aldy & William A. Pizer, 2016. "Editor's Choice Alternative Metrics for Comparing Domestic Climate Change Mitigation Efforts and the Emerging International Climate Policy Architecture," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(1), pages 3-24.
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    3. Aldy, Joseph Edgar & Pizer, William, 2016. "Alternative Metrics for Comparing Domestic Climate Change Mitigation Efforts and the Emerging International Climate Policy Architecture," Scholarly Articles 22808338, Harvard Kennedy School of Government.
    4. Carlos A. Flores & Alfonso Flores-Lagunes & Arturo Gonzalez & Todd C. Neumann, 2012. "Estimating the Effects of Length of Exposure to Instruction in a Training Program: The Case of Job Corps," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 153-171, February.
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