The True Cost of Greenhouse Gas Emissions: Analysis of 1,000 Global Companies

Nagisa Ishinabe,Shunsuke Managi,Hidemichi Fujii,Alejandro Raul Hernandez Montoya

doi:10.1371/journal.pone.0078703

Abstract

This study elucidated the shadow price of greenhouse gas (GHG) emissions for 1,024 international companies worldwide that were surveyed from 15 industries in 37 major countries. Our results indicate that the shadow price of GHG at the firm level is much higher than indicated in previous studies. The higher shadow price was found in this study as a result of the use of Scope 3 GHG emissions data. The results of this research indicate that a firm would carry a high cost of GHG emissions if Scope 3 GHG emissions were the focus of the discussion of corporate social responsibility. In addition, such shadow prices were determined to differ substantially among countries, among sectors, and within sectors. Although a number of studies have calculated the shadow price of GHG emissions, these studies have employed country-level or industry-level data or a small sample of firm-level data in one country. This new data from a worldwide firm analysis of the shadow price of GHG emissions can play an important role in developing climate policy and promoting sustainable development.

Highlights

Our study focuses on the true cost of emissions reduction at the firm level by computing the evidence-based shadow price of greenhouse gas (GHG) emissions by company, which is estimated by a production function approach using GHG data
The average shadow price of GHG emissions for the observed sample of 1,024 companies in 37 countries worldwide is $10,414, and the median price is $4,189; these values are much higher than the corresponding values in any of the previous studies (Table 1)
The reason for the higher shadow price is the use of the Scope 3 GHG emissions data in this study

Summary

Introduction

Our study focuses on the true cost of emissions reduction at the firm level by computing the evidence-based shadow price of greenhouse gas (GHG) emissions by company, which is estimated by a production function approach using GHG data. The study covers 1,024 major companies of 17 industries in 37 countries over the period from 2002 to 2009 This survey allows us to observe the patterns of the shadow price of GHG emissions among firms and sectors over many years and to examine efficient and effective pathways to transform our socio-economic systems into sustainable systems. When regulations pertaining to the total quantity of GHG emissions are introduced, the degree of impact on each company in each country is uncertain. This study determines the present shadow price and the effect of market competitiveness in terms of GHG emissions at the company level as well as the degree of impact on each company under carbon constraints and on its international competitiveness when reductions in the total quantity of GHG emissions are introduced

Methods

Results

Conclusion