Carbon Premium: Is It There?

Fisher College of Business Working Paper No. 2022-03-006

Charles A. Dice Center Working Paper No. 2022-06

59 Pages Posted: 28 Jul 2022 Last revised: 9 Dec 2022

Multiple version iconThere are 3 versions of this paper

Date Written: September 26, 2022


The carbon premium refers to the excess return associated with the carbon-brown firms and is the focus of several recent influential studies. After accounting for the data release lag and with value weighting, less carbon-intensive firms earn higher returns in the U.S., while there is no excess return associated with total carbon emissions and emission growth. Internationally, the carbon return is zero on average and is lower in countries with strong climate taste shocks during the transition, such as sustainable flows and climate concerns. After controlling for the in-sample shocks, the carbon return is higher in countries more exposed to climate change.

Keywords: carbon emissions, climate change, transition risk, predictability, stock returns

JEL Classification: G10, G12, G15

Suggested Citation

Zhang, Shaojun, Carbon Premium: Is It There? (September 26, 2022). Fisher College of Business Working Paper No. 2022-03-006, Charles A. Dice Center Working Paper No. 2022-06, Available at SSRN: or

Shaojun Zhang (Contact Author)

The Ohio State University

2100 Neil Avenue
Columbus, OH 43210-1144
United States


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