Abstract
Design/methodology/approach: The methodology used in this paper combines decisions in the form of policymakers setting carbon taxes and rational investors investing in carbon emission markets.
Findings: The authors show that the unpaid social cost of carbon in the fossil fuel industry was US$12.7tn over 1995-2013, but may be as high as US$115.5tn.
Originality/value: Over the same period, the sum of industry profits, emission trading scheme carbon permit and carbon tax revenue totalled US$7tn, indicating the industry would not be viable if it was made to pay for damages to society.
| Language | English |
|---|---|
| Pages | 122-134 |
| Number of pages | 13 |
| Journal | Accounting Research Journal |
| Volume | 31 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 2018 |
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Keywords
- Carbon accounting
- Carbon tax
- Emissions trading scheme
- Fossil fuel industry
- Legal looting
- Social cost of carbon
Cite this
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The unpaid social cost of carbon : Introducing a framework to estimate "legal looting" in the fossil fuel industry. / Linnenluecke, Martina K.; Smith, Tom; Whaley, Robert E.
In: Accounting Research Journal, Vol. 31, No. 2, 2018, p. 122-134.Research output: Contribution to journal › Article › Research › peer-review
TY - JOUR
T1 - The unpaid social cost of carbon
T2 - Accounting Research Journal
AU - Linnenluecke, Martina K.
AU - Smith, Tom
AU - Whaley, Robert E.
PY - 2018
Y1 - 2018
N2 - Purpose: This paper aims to examine the complex issue of the social cost of carbon. The authors review the existing literature and the strengths and deficiencies of existing approaches. They introduce a simple methodology that estimates the amount of “legal looting” in the fossil fuel industry as an alternative approach to calculate an unpaid social cost of carbon. The “looting amount” can be defined as society’s failure to charge fossil fuel firms for the damage that their activities cause represents an implied subsidy.Design/methodology/approach: The methodology used in this paper combines decisions in the form of policymakers setting carbon taxes and rational investors investing in carbon emission markets.Findings: The authors show that the unpaid social cost of carbon in the fossil fuel industry was US$12.7tn over 1995-2013, but may be as high as US$115.5tn.Originality/value: Over the same period, the sum of industry profits, emission trading scheme carbon permit and carbon tax revenue totalled US$7tn, indicating the industry would not be viable if it was made to pay for damages to society.
AB - Purpose: This paper aims to examine the complex issue of the social cost of carbon. The authors review the existing literature and the strengths and deficiencies of existing approaches. They introduce a simple methodology that estimates the amount of “legal looting” in the fossil fuel industry as an alternative approach to calculate an unpaid social cost of carbon. The “looting amount” can be defined as society’s failure to charge fossil fuel firms for the damage that their activities cause represents an implied subsidy.Design/methodology/approach: The methodology used in this paper combines decisions in the form of policymakers setting carbon taxes and rational investors investing in carbon emission markets.Findings: The authors show that the unpaid social cost of carbon in the fossil fuel industry was US$12.7tn over 1995-2013, but may be as high as US$115.5tn.Originality/value: Over the same period, the sum of industry profits, emission trading scheme carbon permit and carbon tax revenue totalled US$7tn, indicating the industry would not be viable if it was made to pay for damages to society.
KW - Carbon accounting
KW - Carbon tax
KW - Emissions trading scheme
KW - Fossil fuel industry
KW - Legal looting
KW - Social cost of carbon
UR - http://www.scopus.com/inward/record.url?scp=85053237244&partnerID=8YFLogxK
U2 - 10.1108/ARJ-08-2017-0138
DO - 10.1108/ARJ-08-2017-0138
M3 - Article
VL - 31
SP - 122
EP - 134
JO - Accounting Research Journal
JF - Accounting Research Journal
SN - 1030-9616
IS - 2
ER -