Adam Smith Business School

Dr Shaojun Zhang, The University of British Columbia and The Ohio State University

"Beyond Brown: Oil Shocks and Carbon Premium"

Wednesday 18 February 2026. 15:00-16:30 Room 250 The Gilbert Scott Building, Main Campus Building

Abstract

This paper reassesses the "carbon premium'', the higher cost of capital for carbon-intensive firms, by showing it is substantially confounded by oil shocks. Energy firms, the largest component of “brown” portfolios, have risk exposures and financing costs that move directly with oil shocks, unlike non-energy brown firms that primarily pass through input costs. These oil-specific shocks explain nearly half the carbon premium's variation during volatile periods. Re-examining the 2015 landmark Paris Agreement, we show that the documented post-PA carbon-premium increase in prior studies is entirely driven by the energy sector’s response to oil price dynamics, not carbon-transition risk.

Bio

Shaojun Zhang is a finance professor at the University of British Columbia and The Ohio State University. Professor Zhang's primary research fields are asset pricing, international finance, and climate finance. She is interested in issues related to expected return, macroeconomy, and climate change. She is an advisory editorial board member of the Journal of Portfolio Management. She earned a bachelor's degree in economics from Peking University and a PhD in finance from New York University's Stern School of Business. Before joining OSU, Zhang was an assistant professor of finance at the University of Hong Kong. Zhang also worked as a portfolio manager at China Investment Corporation and Vanguard. She teaches investments and investment management.

 

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First published: 20 January 2026