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Paul MahoneyE-mail  E-mail    print  Print

Risk Tolerance

Paul Mahoney

VIRGINIA LAW GRADUATES have been deeply involved in the central public policy issues of recent years, including the response to the financial crisis and the task of securing U.S. infrastructure, transportation networks, and borders. Past issues of the UVA Lawyer have addressed these critical challenges and the role that Virginia graduates play in answering them. In this issue, we highlight energy policy.

Energy policy is hardly a new public concern. It burst dramatically onto the scene in the 1970s as the 1973 Arab-Israeli War and subsequent oil embargo triggered an oil crisis. Many of us are old enough to remember gas lines and rationing during the worst of the crisis. The subsequent calm was short-lived: oil prices spiked again in the wake of the 1979 Iranian revolution. After a long period of stability, oil prices rose again in the latter part of the current decade.

Today, concerns about the reliability of oil supplies continue but share center stage with public concern about the environmental consequences of burning fossil fuels. We are in the middle of a national debate about the scale and composition of our energy use in future decades and the role of government in determining both through taxation, subsidies, and regulatory policy.

Once again, Virginia lawyers are in the thick of things. We highlight a group of graduates who work in or advise the energy sector and provide their insights into the choices we face.

We hear from Tom Farrell ’79, CEO of Dominion Resources, Euclid Irving ’77 of Jones Day, and Brad Keithley ’76 of Perkins Coie about the future prospects of the three fuels that generate the bulk of electrical power—coal, natural gas, and uranium. These energy sources are not going away in the near term, so the focus of policy will be to reduce carbon emissions from coal, reduce the environmental impact of extracting natural gas, and improve the safety of nuclear plants and nuclear waste disposal.

There are enormous amounts of stored energy in other sources— sunlight, wind, water, hydrogen, and the earth’s interior, among others. A cleaner energy future depends on finding ways to extract that energy economically and with a minimum of unintended side effects. We also spoke to graduates working in and advising the alternative energy sector, including Michael Alvarez ’80 of First Wind, Ed Baranowski ’71 of Porter Wright, and Hank Habicht ’78 of SAIL Venture Partners. I think you will enjoy hearing their views about the future of alternative energy.

One fundamental problem that bedevils the choice of energy sources is the difficulty of determining and internalizing the true costs of each source, including environmental costs that cannot be measured today but that subsequent generations will have to bear. The possibility that carbon emissions will cause harm through global warming is just the latest of these concerns. What to do depends on our tolerance for risk, our assessment of how much our own actions can raise and reduce those risks, and how much we are willing to spend in a quest to reduce future impacts that could range from modest to catastrophic. Professor Jonathan Cannon articulates the precautionary view that in light of the uncertainty of future global temperatures and their consequences, we should err on the side of reducing emissions whenever it is not economically ruinous to do so.

One of the most important things we can do to address future challenges is to train the next generation of leaders, a task at the heart of the Law School’s mission. Our current Capital Campaign focuses on our students first and foremost by targeting financial aid and faculty support. The magazine concludes with a piece by our Capital Campaign co-chairs, David Mulliken ’75 and Ned Kelly ’81. They make an eloquent case for the importance of the Capital Campaign to the Law School’s future. I hope you will take the time to read it.