Paper Carbon Burden

We compute the U.S. corporate sector's "carbon burden"---the present value of social costs of future carbon emissions. Our baseline estimate is 131% of total corporate equity value. Meeting the Paris Agreement goals would reduce the burden by roughly one-fourth, but emissions forecasts and firms' own targets fall short of that reduction. 13% of firms have carbon burdens exceeding their market capitalizations, even with indirect emissions excluded. Firms with higher carbon burdens have higher costs of capital, even after controlling for past emissions. Only a small fraction of the burden is priced through that channel, however.

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