Brown Capital (Re)Allocation

86 Pages Posted: 16 Apr 2024

See all articles by Olivier Darmouni

Olivier Darmouni

Columbia University - Columbia Business School, Finance

Yuqi Zhang

Columbia University - Columbia Business School

Date Written: April 16, 2024

Abstract

We study who owns coal power plants - the largest single source of carbon emissions - in Europe. A sharp increase in private firms' ownership was met by a large decline in public equity ownership. This decline was not driven by public equity investors selling plants, but by their scaling down of plants quickly. State investors played a crucial role, selling to private firms and slowly scaling down their plants. We calibrate a model in which asset owners vary in how they value externalities. Nationalization by state investors that value social factors (jobs, "energy security") can hinder "green finance" in decreasing emissions.

Keywords: Energy transition, capital reallocation, exit vs. voice, state ownership, climate finance, energy security, private equity JEL codes: G32, G11, E440, H54, Q40

JEL Classification: G32, G11, E440, H54, Q40

Suggested Citation

Darmouni, Olivier and Zhang, Yuqi, Brown Capital (Re)Allocation (April 16, 2024). Available at SSRN: https://ssrn.com/abstract=4796331 or http://dx.doi.org/10.2139/ssrn.4796331

Olivier Darmouni (Contact Author)

Columbia University - Columbia Business School, Finance ( email )

3022 Broadway
New York, NY 10027
United States

Yuqi Zhang

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

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