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Carbon Capture

Carbon Capture

Carbon capture analyses the historical performance of a companies carbon emissions, evaluates a company's true growth in carbon emissions and calculates the risk of an increase in carbon.

Overview

Staring with the industrial revolution the world has has seen a steady increase in the emissions of carbon into the atmosphere. On the other hand, some companies have taken the necessary actions to decrease their carbon emissions..

Carbon Capture model identifies the true risks associated with the carbon emissions of a company. Like other traditional measures of risk, volatility is not a true representation of carbon risk, therefore we have created this model that allows our clients to distinguish companies according to their Carbon risk. A higher Carbon Capture number indicates how much the carbon emissions of a company are likely to increase by in the upcoming years according to a historical analysis.

Carbon emissions can not be analyzed through the traditional lenses of finance. 15Rock uses financial engineering techniques to combine traditional and unorthodox methods of data analyses. The Carbon capture is prime example. All volatility is not bad volatility, especially in the case of carbon emissions. Based on this idea we have created the Carbon capture model.

Design and Modelling

Assumptions

Standard deviation is not an ideal measure to capture carbon risk. Any downside variation in carbon is considered to have a positive impact on the value of a company.

Inputs

  • Carbon emissions for a single company
  • {{Carbon.Ticker}}
  • Average industry Carbon from the respective industry
  • {{url}}/company/aapl.us/industry-average

Calculations

  • Change in company carbon emissions
  • Carbon emissions in 2019 - carbon emissions in 2018
  • for all available years
  • Change in industry average carbon emission
  • industry average carbon emission in 2019 - industry average carbon emission  in 2018
  • for all available years
  • Upside standard deviation
  • Extract years where the change in company emissions is positive. essentially, select the years where carbon has increased from the previous years
  • Calculate the standard deviation of these changes
  • Carbon Capture
  • (change in company carbon emissions (eg 2019) - change in industry emissions (eg 2019)) / upside standard deviation