Carbon cost pass-through and access to capital shape firms’ carbon strategies
File(s)
Published version
Author(s)
Ostrovnaya, Anastasiya
Ahrens, Jan
Smart, Julian
Theocharidou, antigoni
Buhr, bob
Type
Journal Article
Abstract
Regulators globally deploy carbon pricing to drive down emissions through market forces. The effect of carbon pricing on firms’ financial profiles is not well understood. However, a financially successful transition of industrial firms is critical for maintaining macroeconomic stability and achieving comprehensive decarbonisation. Here we analyse the costs of carbon pricing compliance and decarbonisation, and their effects on the cashflows and margins of six steel and cement firms across various future cost scenarios. We used a model framework that estimates the impact of carbon pricing and decarbonisation costs on operating margins and capital expenditure on a company level for a range of scenarios. We conclude that the key determinant of how readily energy-intensive companies can adapt to the climate transition is the ‘carbon cost pass-through’, that is, their ability to effectively pass on carbon-related expenses to consumers. Importantly, even the ability to pass through all costs does not guarantee financially successful decarbonisation, as capital markets can restrict the financing of zero-carbon solutions.
Date Issued
2026-06-18
Date Acceptance
2026-03-29
Citation
Communications Earth & Environment, 2026, 7
ISSN
2662-4435
Publisher
Nature Portfolio
Journal / Book Title
Communications Earth & Environment
Volume
7
Copyright Statement
© The Author(s) 2026. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
License URL
Identifier
10.1038/s43247-026-03495-y
Subjects
Climate Change
Carbon Price
Climate Finance
Energy Transition
Publication Status
Published
Article Number
ARTN 524
Date Publish Online
2026-04-18