Finance and Accounting Research Seminar- Per Stromberg

Wednesday, 21 October 2026 at 13:45

Young Firms, Dirty Capital: Decarbonization and Capital Upgrading

Event details

Does climate policy induce capital upgrading — and equally so across all firms? We
use the universe of heavy goods vehicles registered to Swedish firms, matched to annual
financial accounts, covering more than 100,000 truck acquisition events over 2007–2020.
Our setting exploits Sweden’s progressive biofuel blending scheme, which raised diesel
costs. Young firms acquire older and lower Euro-standard trucks than established
firms– consistent with young firms having insufficient internal funds to meet the larger
down payments required for newer, cleaner capital. Studying entry, exit, and fleet-level
margins, we show that this gap widens as diesel costs rise, with young firms substituting
toward used trucks and leasing to partially offset the financing hurdle. Where the
financing constraint is directly measurable — a statutory capital requirement obliges
licensed haulage firms to hold equity that scales with fleet size — firms pinned against
the legal equity floor acquire progressively older trucks as blending intensifies, an effect
concentrated in precisely the purchases that raise the required capital. At the fleet level,
young firms with high diesel exposure maintain older and lower Euro-standard fleets as
blending intensifies, with blending widening the pre-existing fleet age gap between young
and established firms by roughly 8 percent. Our results highlight that the distributional
consequences of climate policy depend critically on the financing environment faced by
firms, and that instruments targeting the financing margin are needed complements to
cost-raising policy.

Organiser

University of Exeter Business School - Finance and Accounting

Location

Kolade (Building One)