This paper documents the stock market’s reaction to findings reported in a 2009 article in the prestigious Nature journal ofscience reporting that only a fraction of the world’s existing oil, gas, and coal reserves could be emitted if global warming by2050 were not to exceed 2°C above pre-industrial levels. The Nature article is now one of the most cited environmentalscience studies in recent years. Our analysis indicates that this publication prompted at most an average drop in stock priceof 2% for our sample of the 63 largest U.S. oil and gas companies. Later, in 2012-2013, the press “discovered” this article,and then wrote hundreds of stories on the grim consequences of unburnable carbon for fossil fuel companies. We show onlya small negative reaction to these later stories, mostly in the two weeks following their publication. This limited marketresponse contrasts with the predictions of some analysts and commentators of a substantial decline in the shareholder value offossil fuel firms from a carbon bubble. Our paper discusses possible reasons for this discrepency.
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