Overview of Regulatory Issues Regarding Various Energy Sources Dwight A. Howes Partner dhowes@reedsmith.com 412-288-5933

US Energy Use Data & Statistics (2010) Total Energy Consumption 98.1 quadrillion Btu By Source Oil 37% Gas 25% Coal 21% Nuclear 9% Renewable 8% By Sector Residential & Commercial 41% Transportation 33% Industrial 26%

World Energy Use Data & Statistics (2009) United States 20% China 17% Russia 6% Japan 4% India Germany 3%

Electricity in the United States Generated in U.S. in 2010 4 Trillion Kilowatt-hours Fossil Fuels Generate Most U.S. Power Coal 45% Natural Gas 24% Oil 1% Total Fossil 70% Nuclear 20% Renewable Hydro 6% Biomass Wind Solar <1%

Regulatory, Development, and Production Issues Coal: least clean fossil fuel Steam coal almost exclusively used to generate electricity. Emissions of sulfur dioxide, nitrous oxides, particulates, mercury, carbon dioxide. Emissions Reduction Technology SO2: Scrubbers – Acid rain no longer significant NOx: Selective catalytic reduction Particulates: Bag houses Mercury & CO2: Technology developing Impediments Difficult to Site New Coal-Fired Plants Difficult to Extend Life of Existing Coal-Fired Plants Mining Impacts

Regulatory, Development, and Production Issues Natural Gas: cleanest fossil fuel Use: Heating, industrial, electric generation, some transportation Emissions of nitrous oxides, volatile organic compounds, carbon dioxide Emissions Reduction Technology: NOx: Selective catalytic reduction VOCs: Thermal CO2: Technology developing Impediments/hydraulic fracturing Advantages Gas-fired power plants relatively faster, easier, cheaper to construct and operate

Regulatory, Development, and Production Issues Oil: Cleaner than coal, not as clean as gas Use: Transportation, heating, industrial, maritime, electric generation Emissions of nitrous oxides, volatile organic compounds, particulates, carbon dioxide Emissions Reduction Technology: NOx: Selective catalytic reduction VOCs: Thermal Particulates: Largely Uncontrolled (except diesel) CO2: Technology developing Impediments/Expensive & Imported No new construction of oil-fired power plants/primarily a transportation fuel

Regulatory, Development, and Production Issues Nuclear (the only non-solar power) No emissions/disposal of nuclear waste In the US: waste disposal on hold/re-processing illegal Nuclear power plants: extremely capital intensive with long time line Seabrook: licensed in 1976 (two units planned, one built), construction completed in 1986, full power in 1990 Shoreham: Construction 1973 – 1984. In 1989, LILCO agreed not to operate plant - $6 billion in costs passed to rate payers 1979: TMI 1986: Chernobyl 2011: Fukushima

Regulatory, Development, and Production Issues Renewables: Hydro Use: Electric generation No emissions/impact of dams Most small hydro generators not being re-licensed No new hydro in U.S. Hydro Quebec, Niagara Mohawk, TVA, Bonneville

Regulatory, Development, and Production Issues Renewables: Biomass Use: Electric generation/source of methane/liquid fuels Essentially the same as natural gas, except no drilling impact

Regulatory, Development, and Production Issues Renewables: Wind Use: Electric generation No emissions/impact of wind turbine towers Dependent on wind Growing, but small contributor to U.S. electric power generation Increasing NIMBY opposition – Nantucket Sound

Regulatory, Development, and Production Issues Renewables: Solar Use: Electric generation/heating/water heating No emissions/large land use Dependent on sunshine Growing, but small contributor to U.S. electric power generation Increasing NIMBY opposition but currently less so than wind

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