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Sophia Katz

Sophia Katz

Born and raised in New York, Sophia is a member of the class of 2021 and Duke’s Business Oriented Women organization. She spent her sophomore year working as an analyst at the Duke Endowment (DUMAC), spent a semester studying abroad in Madrid, Spain, and completed her Public Policy Internship at EarthShare NC, a non-profit focused on strengthening over 70 of North Carolina’s environmental conservation organizations and non profits. She is also involved with The Uptick, a financial newsletter aiming to increase women’s financial literacy. Sophia worked as an analyst in the Tactical Opportunities group at Blackstone during her junior summer and will be returning full time after graduation. Sophia is interested in the crossover between environmental policy and capital markets and how policy can be used to incentivize investments in clean energy technology and infrastructure.

Honors Thesis:

Wasted Energy: Re-Directing Investment Into Renewables Through Environmental Policy

Faculty Advisor: Professor Christopher D. Timmins

Abstract: The Clean Power Plan (CPP) was the first ever regulation to limit carbon dioxide (CO2) emissions from existing power plants under the Clean Air Act (CAA) and is recognized as one of the most monumental steps towards taking action on climate change and investing in renewable energy. The policy is, however, commonly denounced by some for its detrimental impact to the U.S. coal manufacturing and production sectors, and grouped with other policies as waging a “War on Coal.” This paper analyzes whether the CPP was an effective policy at swaying investor mindsets in energy capital markets and decarbonizing investor portfolios. This analysis differs from previous literature through its focus on an event study of specific brown and green energy indices and exchange traded funds (ETFs) at the time of the CPP’s proposal on June 2, 2014 and final announcement on August 3, 2015. The presence or lack of discontinuities in the market in the 100-day trading window surrounding both events serves as a measure for understanding investors’ reactions to the policy and its implications for future profits. This paper also describes the legal and political pushback to the policy as well as instances of disinformation spread by the coal industry to compensate for a bleak cashflow outlook. Discussion on the implications of using policy as a government intervention to create greener and cleaner markets concludes this paper, arguing that environmental policy can serve as an effective tool to decrease investment in carbon-intensive energy sources, as climate change poses an increasing risk to the planet and public health.