Atiya Islam, doctoral candidate in economics in the College of the Liberal Arts, will lead a seminar on the effects of policy on the shift from coal to natural gas and other renewables in electricity generation.
Her free talk - "Energy Transition in the Context of the First Market-based Cap and Trade Program in the U.S." - is scheduled for noon on Wednesday, Feb. 18, in 157 Hosler Building at Penn State's University Park campus. The event is part of a spring seminar series hosted by the Initiative for Energy and Environmental Economics and Policy (EEEPI).
The U.S. electricity sector has undergone a substantial transition from coal to natural gas and renewable generation over the past two decades, yet the extent to which environmental regulation has contributed to this shift remains unclear. Islam will discuss firm-level responses to the Regional Greenhouse Gas Initiative (RGGI), the first market-based carbon cap-and-trade program in the United States.
"To quantify the role of policy in shaping these outcomes, we developed a dynamic structural model of electricity generation, pricing, investment and relocation that incorporates differences in incentives across regulated and deregulated markets," said Islam, who is advised by Emily Pakhtigian, assistant professor of public policy and the Jeffrey L. and Sharon D. Hyde-McCourtney Career Development Professor. "The model is designed to disentangle policy-driven effects from broader market forces such as declining natural gas prices, measure the extent of cost pass-through to retail electricity prices and evaluate the spillover effects of emissions regulation on neighboring states."
Moving forward, the researchers plan to use the estimated model to conduct counterfactual policy experiments that assess how the energy transition, firm location decisions and consumer prices would have evolved in the absence of RGGI and under alternative regulatory regimes.
"This framework provides a unified approach to understanding how market-based environmental policies reshape firm behavior and electricity market outcomes," Islam said.
Islam's research focuses on industrial organization, particularly within the health care and energy industries. She studies economic agents' decision-making in response to policy and information.
About EEEPI
Established in 2011, EEEPI operates as a University-wide initiative at Penn State with support from the Earth and Environmental Systems Institute and the Institute of Energy and the Environment. EEEPI seeks to catalyze research in energy and environmental systems economics across the University and to build a world-class group of economists with interests in interdisciplinary collaboration.
