What if companies had to pay for the problems their carbon emissions cause? Their profits would plunge, according to new estimates, possibly wiping out trillions in financial gains.
These results, spelled out in a recent study in the journal Science, are based on analysis of almost 15,000 publicly-traded companies around the world. To calculate how much each ton of carbon emissions ends up costing society, economists used the Environmental Protection Agency’s estimate of $190 per ton.
For all of those companies combined, the damage would run into the trillions of dollars, Christian Leuz, a coauthor of the study and a business professor at the University of Chicago, told the Associated Press. The researchers only included direct emissions from companies, not “downstream” emissions related to the products they sell. (So emissions from the operations needed to build cars would count; the pollution that comes out of its tailpipe wouldn’t.)
They found that the cost of damage surpassed profits for highly polluting industries, including energy, utilities, transportation, and materials manufacturers — a group that accounted for 89 percent of the total. Researchers didn’t name any specific companies.
The study arrives during a summer when the costs of climate change are coming clearly into view, as historic flooding, deadly wildfires, and frequent heat waves have rattled the United States. The administrator of the Federal Emergency Management Agency warned last week that the pace of disasters has been so frequent that it’s running out of cash. And the economic consequences of climate change go beyond emergency response: Extreme heat is believed to cost the U.S. economy billions in lost productivity every year.