When wildfires ravaged Los Angeles County earlier this year, they destroyed thousands of homes and caused exorbitant insurance claims. But a less obvious disaster also occurred: satellites detected massive plumes of CO₂, rivaling the yearly emissions of some small countries. In just days, the fires released more carbon pollution than all of California’s passenger vehicles emit in a month.
Yet none of it counts toward the state’s official climate ledger.
Despite California’s ambitious climate laws and sophisticated carbon accounting, emissions from wildfires are treated as natural disasters—uncontrollable and, therefore, unaccountable. But with wildfires now exacerbated by fossil fuel combustion, hotter weather, and poor forest management, experts say this blind spot is no longer defensible. Fires are both a consequence and a contributing factor to the climate crisis.
“Wildfires in California have become a major and growing source of greenhouse gas emissions,” said Michael Jerrett, professor at UCLA’s Fielding School of Public Health, in a study. “Wildfire emissions in 2020 essentially negate 18 years of reductions in greenhouse gas emissions.”
In that year, wildfires released an estimated 127 million metric tons of CO₂—twice the amount produced by California’s entire power sector. Because these emissions originate from trees rather than smokestacks, they are often excluded from climate inventories due to a technicality known as the “fast carbon cycle.” The idea is that forests will eventually reabsorb the carbon they release. However, with longer fire seasons and declining ecosystems, that reabsorption is no longer assured.
Today’s wildfires burn hotter, spread faster, and start more easily than those of decades past. Rising global temperatures, prolonged drought, earlier snowmelt, and increasingly dry vegetation are all part of the equation. So is human encroachment into fire-prone areas, which increases ignition sources—from cars to power lines—and puts more lives and infrastructure at risk.
“In a warmer world, we’re already seeing more extreme wildfires that put both people and nature at risk,” said Katharine Hayhoe, chief scientist for The Nature Conservancy’s publication. ”More than a century of fuel build-up, past land and fire management, fire exclusion, and expansion into the wildland-urban interface all play a part.”
Carbon Risk Is Becoming A Financial Liability
The Global Wildfire Information System estimates that wildfires release between 5 and 8 billion tons of CO₂ each year—roughly one-fifth of the total emissions from the entire cement industry, one of the world’s biggest polluters. These fire-related emissions are often viewed as byproducts of global warming. But that’s changing.
The consequences of ignoring wildfire emissions are no longer just ecological—they’re economic. Wildfires disrupt everything from supply chains and insurance premiums to asset valuations. Companies with fire exposure may experience a decline in their valuations, particularly as investors scrutinize climate-related risks.
A McKinsey study found that 83% of Fortune Global 500 companies have climate-related targets; however, far fewer address nature-based threats, such as wildfires, drought, or land degradation. This leaves firms vulnerable not only to physical damage but also to shareholder lawsuits and director liability.
Some institutions are responding. The USDA Forest Service and EPA have begun integrating wildfire emissions into national inventories. Platforms like Climate TRACE, which use satellites to monitor pollution in real-time, reveal that we underreport carbon sources, including wildfires. Meanwhile, reinsurers and insurers—who shoulder billions in wildfire losses—are calling for climate-adjusted pricing.
And S&P Global Ratings and Moody’s warn that utilities with wildfire exposure face mounting credit risks unless they invest in prevention, resilience, and emergency planning. The real-world results and the remedies?
Few examples illustrate the financial fallout of fire-driven climate risk better than PG&E. The utility filed for Chapter 11 bankruptcy in January 2019, overwhelmed by $30 billion in liabilities linked to fires between 2015 and 2018. Investigators determined that PG&E’s equipment caused several major blazes, including the 2018 Camp Fire, the deadliest and most destructive in California history.
The company emerged from bankruptcy in 2020 after agreeing to a $13.5 billion settlement with fire victims and pledging billions toward safety upgrades. The utility has become a case study in the cost of ignoring climate exposure. PG&E now routinely shuts down power during high-risk conditions. While controversial, Hawaiian Electric and PacifiCorp employ similar tactics.
Climate Leadership Requires Carbon Accountability
The bankruptcy also changed how the entire utility sector views risk. Companies now invest in vegetation management, grid modernization, and predictive analytics. But even these steps only address the triggers and technical solutions—not the obvious disconnect centered on carbon math.
California continues to lead the nation in climate policy, with ambitious targets for zero-emission energy and net-zero emissions by 2045. Governor Gavin Newsom has invested in forest thinning, prescribed burns, and firefighting capacity. But wildfire emissions are still excluded from the state’s formal climate goals.
“The debate is over around climate. Just come to the state of California. Observe it with your own eyes,” Newsom said in 2020, surveying wildfire damage.
That line captured both the urgency and irony. While California acts boldly on decarbonization, it still underestimates one of its largest and fastest-growing sources of CO₂. The result is a policy blind spot with global implications.
When California’s fires take out the forests and emit more CO₂ in a single season than the state’s power sector, we are not addressing the climate crisis—we are just greenwashing it.
