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Carbon Burden

Author

Listed:
  • Lubos Pastor
  • Robert F. Stambaugh
  • Lucian A. Taylor

Abstract

We quantify the U.S. corporate sector's carbon externality by computing the sector's “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. Among individual firms, 77% have carbon burdens exceeding their market capitalizations, as do 13% of firms even with indirect emissions omitted. 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. Firms' emissions are predictable by past emissions, investment, climate score, and book-to-market.

Suggested Citation

  • Lubos Pastor & Robert F. Stambaugh & Lucian A. Taylor, 2024. "Carbon Burden," NBER Working Papers 33110, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33110
    Note: AP CF EEE
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    More about this item

    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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