Report: Cap And Trade Bill Will Cut S&P 500 Earnings By 1%

carbon sunset tbi

The Investor Responsibility Research centre Institute and Trucos released a report assessing the affects from the cap and trade bill on S&P 500 companies.

GreenBiz poured through the 40 page report and cut to the heart of the matter: Utilities get screwed, but for the whole S&P 500 carbon costs only total 1% of earnings.

GreenBiz: The analysis found out that direct greenhouse gas emissions from companies in the S&P 500 in 2007 added up to about 2,173 million tons of carbon dioxide equivalents, more than all the emissions from cars, trucks, buses and aircraft in the United States. Total emissions, including emissions from first-level suppliers, totaled 4,307 million tons of carbon dioxide equivalents.

If a market price of $28.24 were applied to each metric ton of emissions, Trucost’s estimate of the carbon market price in 2012, that would bring carbon costs to more than $92.8 billion, more than 1 per cent of revenue from the companies.

The sector facing the biggest financial risk is utilities, which emits almost 60 per cent of all operation greenhouse gases from the S&P 500. If the 34 utilities in the S&P 500 had to pay for their emissions, their earnings would slide 45 per cent. But in looking at risks to individual companies, the financial implications vary widely, from causing earnings to fall anywhere from less than 1 per cent to 117 per cent. For 203 companies, carbon costs would amount to less than 1 per cent, and 71 companies’ earnings would fall 10 per cent or more.

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