June 6, 2014
The Future of Energy Policy
Moderator: David M. Schizer, Dean and the Lucy G. Moses Professor of Law and the Harvey R. Miller Professor of Law and Economics
Panelists: Molly S. Boast ’79, Partner, Wilmer Cutler Pickering Hale & Dorr; Michael B. Gerrard, Andrew Sabin Professor of Professional Practice; Thomas W. Merrill, Charles Evans Hughes Professor of Law; Chun Wei ’84 LL.M., Managing Partner, Sullivan & Cromwell’s Hong Kong office
Alumni and Professors Discuss Increased Energy Production in the U.S.
Dean David Schizer, Professors Michael Gerrard and Thomas Merrill, and Molly Boast ’79 and Chun Wei ’84 Analyze the Economic, Geopolitical, and Environmental Consequences of Fracking.
The dramatic rise in shale oil and gas production in the past decade has transformed the U.S. energy landscape, with important implications for the U.S. economy, geopolitical position, and environment, a panel of expert Columbia Law School professors and graduates said Friday, June 6 at a discussion on “The Future of Energy Policy” at Reunion 2014. This new energy supply contributes significantly to economic growth, and also strengthens the U.S. geopolitically, but its implications for the environment are more complex.
Chun Wei '84 LL.M. discussed the implications of fracking in China.
In a panel moderated by David M. Schizer, dean and the Lucy G. Moses Professor of Law and the Harvey R. Miller Professor of Law and Economics, the experts considered the benefits and environmental risks of hydraulic fracturing, or fracking, as well as regulatory options for the practice. Fracking is the technique being used to release previously inaccessible energy reserves by pumping fluid at high pressure to crack shale and release the gas and oil trapped inside.
Largely because of the reserves made accessible by fracking, the U.S. is now the largest natural gas producer in the world and is on track to surpass Saudi Arabia as the largest oil producer in the world by 2020.
“It really is an important change in the world that the U.S. has tapped all this energy,” said Dean Schizer before introducing Columbia Law School Professor Michael B. Gerrard to discuss the climate change implications of fracking.
Gerrard, who directs the Law School’s Center for Climate Change Law, said fracking has “some good news, some bad news, and some we-don’t-know-yet news.” He pointed out that natural gas is “immensely cleaner” than coal but not as clean as renewable sources of energy—like wind and solar.
Columbia Law School Professor Thomas W. Merrill, who along with Dean Schizer wrote “The Shale Oil and Gas Revolution, Hydraulic Fracturing, and Water Contamination: A Regulatory Strategy,” discussed potential regulatory regimes for fracking, including requiring baseline water testing, disclosure of the chemicals used in the process, and liability for the companies involved.
"My experience in this industry with these newer players is that they are not always aware of the risks," said Molly Boast '79 of new investors who are not as familiar with the rules and regulations of energy production.
Chun Wei ’84 LL.M. addressed the implications of fracking in China, which has larger shale oil and gas reserves than the United States.
“No country is in more urgent need of developing cleaner energy than China,” said Wei, who serves as managing partner of Sullivan & Cromwell’s Hong Kong office.
Still, Wei pointed out that China’s reserves may be harder to tap into than those in the United States because of dense population, or a lack of the water or infrastructure necessary to produce, reach and transport the material. She also said China’s economic policies will be a challenge for foreign investors looking to enter the market.
Molly S. Boast ’79, a partner in Wilmer Cutler Pickering Hale & Dorr’s antitrust practice, brought the conversation back to the United States with an analysis of some of the antitrust concerns involved in domestic fracking. Investors often team up to share the risks associated with trying to identify viable sources of gas and oil, but doing so can raise flags for regulators if, for example, the partners put a cap on bonuses for employees or agree not to compete for business, Boast said.
Unlike the traditional oil and gas industry, where the major players are familiar with the rules and regulations that apply to their business operations, fracking has attracted many new or first-time investors.
“My experience in this industry with these newer players is that they are not always aware of the risks,” Boast said.
Schizer concluded the program by saying there are benefits and risks to any energy production scheme.
“There really is no such thing as a free lunch in the world of energy,” he said. “We have to think carefully about the advantages and disadvantages of each technique, and if we can manage the disadvantages, that’s a very good thing to do.”