Department
Business and Information Technology
Major
Information Science and Technology
Research Advisor
Zhou, Yishu
Advisor's Department
Economics
Funding Source
OURE
Abstract
With climate change becoming a growing concern, carbon trading has gained attention as a key solution to reducing carbon emissions. However, this raises a concern about whether polluters pass the cost of carbon to electricity prices. This study aims to assess the impact of CO2 pricing on electricity prices in the PJM market where some areas are regulated by carbon trading while others are not. Our findings reveal a significant impact of CO2 prices across all regulated areas, encompassing both real- time and day-ahead markets. Moreover, the impact extends to non-regulated areas, indicating a spillover effect within the PJM market. Interestingly, the electricity price increase in unregulated areas negatively correlates with their distance to regulated areas. The strongest impact is observed during peak hours. These findings highlight how carbon trading policies affect electricity prices, showing how regulations in one area can influence pricing across the energy market.
Biography
Love Gami is a sophomore at Missouri S& T, pursuing a degree in Information Science and Technology. His academic journey took an intriguing turn in Fall 2023 when he delved into undergraduate research alongside Professor Yishu Zhou in the Department of Economics. Together, they embarked on a study focusing on the intricate dynamics of carbon price pass-through to electricity prices under partial regulation. This experience ignited Love's passion for detailed research in similar domains, driving him to seek further exploration and contribution in this field.
Research Category
Social Sciences
Presentation Type
Oral Presentation
Document Type
Presentation
Award
Social Sciences Oral Session - Second Place
Location
Havener Center - Turner Room
Presentation Date
10 April 2024, 1:00 pm - 4:00 pm
CO2 Pricing Pass-Through to Electricity Prices Under Partial Regulations
Havener Center - Turner Room
With climate change becoming a growing concern, carbon trading has gained attention as a key solution to reducing carbon emissions. However, this raises a concern about whether polluters pass the cost of carbon to electricity prices. This study aims to assess the impact of CO2 pricing on electricity prices in the PJM market where some areas are regulated by carbon trading while others are not. Our findings reveal a significant impact of CO2 prices across all regulated areas, encompassing both real- time and day-ahead markets. Moreover, the impact extends to non-regulated areas, indicating a spillover effect within the PJM market. Interestingly, the electricity price increase in unregulated areas negatively correlates with their distance to regulated areas. The strongest impact is observed during peak hours. These findings highlight how carbon trading policies affect electricity prices, showing how regulations in one area can influence pricing across the energy market.
