Carbon Burden

Pástor, Luboš, Robert F. Stambaugh and Lucian Taylor

No 19668, CEPR Discussion Papers from Centre for Economic Policy Research

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.

Keywords: Externality (search for similar items in EconPapers)
JEL-codes: D62 G30 G38 Q51 Q54 (search for similar items in EconPapers)
Date: 2024-11
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