1. University of Pittsburgh School of Law 2013 Energy Law & Policy Institute David Spence August 1, 2013

2. U.S. Energy Policy in 2013 Policy problems (environment/energy nexus, promoting efficient energy markets, etc.) Ideology  regulation vs. markets is really naïve markets vs. naïve regulation If not “rational middle,” then more of a middle

3. U.S. Energy Flows

4. U.S. Energy Policy in 2013 Policy problems (environment/energy nexus, promoting efficient energy markets, etc.) GHG regulation MATS, CSAPR, once-through cooling, etc. RPS battles in states Shale gas production/fracking “Can energy markets be trusted?”  from CA energy crisis to Barclays/JP Morgan Capacity markets vs. pure energy markets vs regulation (Texas)

5. U.S. Energy Policy in 2013 Policy problems (environment/energy nexus, promoting efficient energy markets, etc.) Ideology  regulation vs. markets is really naïve markets vs. naïve regulation In theory: who do you trust? Theory vs. reality Centrifugal forces – cognitive biases and cultural cognition of risk

6. Electricity Markets “Can energy markets be trusted?”  from CA energy crisis to Barclays/JP Morgan Capacity markets vs. pure energy markets vs regulation (Texas) MMUs in organized markets Mandatory features of organized markets Capacity markets vs. pure energy markets– is price a sufficient signal? Would consumers prefer security?

7. First horizontal wells fracked in the Barnett Shale 56% 9% 37% 30% 5% a Data source, US EIA 2005: Nat. Gas Wellhead Price = $7.33/mcf 2012: Nat. Gas Wellhead Price = $2.66/mcf Arab Oil Embargo: reduced use of oil and gas for electricity generation Wider use of mountaintop removal reduces costs of coal mining Share of Electricity Production for Coal, Natural Gas, and Non-Hydro Renewables, 1949-2012 New generation of EPA rules developed Shale Gas vs. Coal

8. U.S. Energy Policy in 2013 Policy problems (environment/energy nexus, promoting efficient energy markets, etc.) Ideology  regulation vs. markets is really naïve markets vs. naïve regulation If not “rational middle,” then more of a middle

9. Thank you