What is the carbon footprint of capital ownership and how are these emissions distributed across the population? Lucas Chancel and Yannic Rehm develop a framework that introduces a new perspective on individual carbon footprints: rather than including in carbon footprints only emissions related to individual consumption and lifestyle choices, they also account for emissions related to the assets and firms owned by individuals. Their framework includes three complementary footprint definitions, which account for asset-ownership to varying degrees, and ensure the results can be compared to the existing carbon inequality literature. The definitions are comprehensive and exclusive, encompassing all emissions associated with economic activity while avoiding double-counting.
Chancel and Rehm then apply their framework and estimate emission inequality in France, Germany and the US, yielding the following results. First, taking into account emissions linked to ownership increases the carbon footprint of the wealthiest 10% of the population by a factor of 2-2.8 as compared to consumption-only estimates, depending on the country. Second, for this group, 75-80% of emissions stem from private asset ownership, not from direct energy consumption. Third, financial assets such as equity are found to emit, on average, 75-150 tCO2e per million dollars or euros. Forth, emissions from private ownership appear to be more concentrated than total wealth, with the top 10% of the population emitting 70-85% of all emissions linked to private asset ownership.
These findings suggest that policies targeting the carbon content of individuals’ assets and investments, rather than focusing only on individual consumption decisions, can be critical to reduce emissions. The authors explore potential policy options consistent with this perspective. Their work and the methodology proposed encourage further research on ownership-based footprints that can be compared across more countries, time periods, and subgroups, thereby advancing the development of distributional environmental accounts.