PhD candidate designs ‘weather forecast’ for fossil fuel market14 August 2017
UQ Business School PhD candidate Ashley Ding during her 3MT presentation.
This article originally appeared on the BEL Faculty Website, on 14 August 2017.
Forecasting volatility in the fossil fuel market is a lot like forecasting the weather, according to a University of Queensland PhD candidate who won her faculty Three Minute Thesis competition last week.
Ashley Ding, a PhD candidate from UQ Business School, was victorious in the Faculty of Business, Economics and Law’s Three Minute Thesis competition for her thesis presentation The forecast is actually accurate!
The Three Minute Thesis (3MT) challenges Research Masters and PhD students to engage a general audience in their research through a succinct and snappy three-minute presentation.
Ms Ding’s presentation focused on part of her thesis – her work on a “forward-looking volatility index” that can produce unbiased forecasts in the fossil fuel and clean energy markets.
“Fossil fuels are important driving forces of the global economy but the fossil fuel market can be quite sensitive,” she said.
“Any fluctuations in fuel prices, and the resulting market volatility can have huge economic impacts.
“As we have seen with extreme weather events, the key to avoiding massive losses is to have an accurate forecast.
“Unfortunately, there is no weather forecast for the fossil fuel market. That’s why I’ve come up with an index that can forecast in the market and give you an accurate volatility reading.”
The index is based on market expectations, derived from fossil fuel option prices. It sounds complicated, but Ms Ding said you don’t need to be a finance expert to read her forecast.
“What my index does is to summarise in one number how volatile the market will be,” she said.
“Whether you’re an investor yourself, or a superannuation fund manager taking care of your clients or a policy-maker addressing climate change, with my accurate weather forecast you can be more certain about something uncertain in the market.”
Ms Ding’s larger thesis examines fossil fuel and clean energy investment, climate change, and the economic and market risks of a ‘business-as-usual’ approach. Initial inspiration for the thesis struck during her time interning as a carbon auditor.
“I was the only student there without a science background,” she said.
“That was the first time I realised that climate change seemed to be discussed by scientists only.
“I thought, ‘is there a way to put the science in an economic context to increase awareness of climate change?’
Ms Ding was named the BEL 3MT winner after a close competition against four of her peers. She received $1000 in research funds and will compete in the UQ 3MT final on 13 September.