Keystone XL – a pipe dream?
After a seemingly endless succession of decisions for and against the pipeline, some compelling reasons have emerged to suggest that the Keystone XL (KXL) may not be completed after all. If completed, the KXL would ferry 825,000 barrels of tar sands oil per day from Alberta to the Gulf of Mexico. The combination of protest, legal wrangling, an expired permit, President Obama’s climate initiatives, further regulations, harmful impacts, and market forces are making the road forward for the KXL much more difficult.
The chorus of those opposing the KXL is increasingly well organized._a0Opposition comes from groups that range in size from small scale local grass roots protests to highly organized national campaigns. A total of two million people submitted comments to the State Department urging that the KXL be rejected. Opposition also comes from ten Nobel Laureates who have sent a letter to President Obama and the Secretary of State urging them not to move forward with the KXL.
Young people are at the forefront of protests. This new generation is increasingly standing up to express their opposition to the pipeline project. This was evident in the faces of the thousand students who protested in front of the White House earlier this year.
There are 74 million people in the U.S. that are in the 18-34 year old group. These also make up the cohort most likely to suffer the worst impacts of climate change. This new generation understands the perils of’a0climate change and they are increasingly advocating for a shift’a0away from fossil fuels towards cleaner forms of energy. While the youth may be at the forefront of calls to kill the KXL, this is truly an intergenerational movement of climate defenders.
Protests against the pipeline continued with the Cowboy & Indian Alliance march on Washington in April. The alliance of farmers, ranchers, and tribal communities came to Washington DC to voice their opposition to the Keystone project.
2. Legal wrangling
On Thursday June 26th, 2014, the Supreme Court of Canada rendered a ground-breaking decision that recognizes the land claim of a B.C. First Nation. This precedent setting ruling will most certainly impede the expansion of fossil fuels in Canada and make the building of pipelines far more difficult. The unanimous ruling granted B.C.’s Tsilhqot’in First Nation title to a 1,700-square-kilometer area of traditional land outside its reserve. The decision sets a game-changing precedent. Going forward, logging, fossil fuel extraction and mining operations on or near aboriginal lands must have the consent from affected aboriginal groups.
The Supreme Court decision states that the government has a duty to consult and accommodate First Nations. If the First Nations group does not consent, the government can only go against its wishes if it proves it’s justified under the Constitution.
There is also a slew of legal issues in Nebraska that is holding up that state’s support for the Keystone project. The use of the southern leg of the KXL is also being challenged. Montana is blocked from using the completed portions of the KXL in Kansas by South Dakota and Nebraska.
3. Expired permit
On June 29, TransCanada’s permit to build the Keystone in South Dakota expired. The permit from South Dakota Public Utilities Commission authorizes TransCanada to build the KXL. This means that TransCanada will have to go through the application process all over again. However, this time, there is likely to be considerably more organized opposition.
4. President Obama
Putting an end to the KXL is a legacy issue for the President. Failure to act will imperil the lives of future generations and ultimately undermine his legacy. It is also a matter of consistency and integrity. Last summer, President Obama made a statement that makes the building of the pipeline hard to justify. He said he would reject the pipeline if it was proven that the KXL has an adverse climate impact. Since then, a large number of scientists, economists, and other experts have put forth a compelling case demonstrating the deleterious environmental impacts associated with the pipeline.
It is difficult to reconcile moving forward with the KXL in light of the President’s recent move to restrict emissions from power plants through the Environmental Protection Agency. It is hard to envision how he could reduce emissions from coal plants while at the same time giving the green light to a pipeline that would expand one of the world’s most destructive carbon bombs.
5. Further regulation
Widely anticipated government regulations will further erode the attractiveness of the tar sands. Rail industry regulations on the transport of fossil fuels will help minimize dangerous accidents while driving up the costs. Perhaps the most effective way of reigning in the tar sands involves some form of carbon pricing. The imposition of a carbon tax or cap-and-trade would also inflate the price and go a long way towards curtailing tar sands expansion.
6. Harmful impacts
The threat from the changing climate and environmental damage caused by fossil fuels is widely documented. There is a consensus among climate scientists that if we continue to burn fossil fuels, burgeoning levels of carbon dioxide will worsen extreme weather, raise sea levels and create mass extinctions. This point is particularly true of tar sands bitumen, which is among the world’s most destructive sources of energy.
Burning fossil fuels already contributes 33.4 billion metric tons of carbon dioxide (CO2) per year. This is destined to get far worse if the tar sands play an expanded role to meet growing energy demand. The world’s energy needs are expected to rise by about a third over the next 20 years.
We have already reached dangerously high levels of CO2 in our atmosphere and we simply cannot afford to continue down this perilous course without incurring catastrophic consequences.
The Canadian province of Alberta has tar sands reserves equivalent to 168.7 billion barrels. This is more than the reserves of Iran, Iraq, Kuwait and Russia. Turning the tar sands into usable fossil fuel products is very energy intensive. Conservative estimates suggest that tar sands bitumen is 14-20 percent more energy intensive than traditional oil.
According to a report titled Fail, approving the KXL would increase U.S. greenhouse gas emissions by 181 million metric tons each year. That represents an equivalent climate impact of 51 coal plants or 37 million cars.
The Keystone XL is expected to leak 91 times over its lifetime, which poses serious risks to land and water, including some of the most sensitive aquifers in North America. The KXL also directly threatens farmers, ranchers, and those who live near the proposed pipeline corridor.
The carbon load form the KXL is not just a local issue, it has global implications. If the pipeline is allowed to go forward, it will make it that much more difficult to keep temperatures below the internationally agreed upon upper threshold limit of 2 degrees Celsius. This imperils the lives and livelihoods of billions of people around the world.
7. Market forces
There is a growing awareness that fossil fuels and the tar sands in particular are increasingly risky and as such, not as attractive an investment as they used to be. A confluence of factors are already coming together to make the KXL less attractive to investors. The protests and the risk of a carbon bubble are part of the equation that is reducing the ROI. Investment in the oil sands have already dropped off and there is shrinking foreign investment in Canada’s oil patch in general.
Rejecting the Keystone XL will increase the costs and help market forces to diminish the economic viability of tar sands expansion. Pipelines are the most cost effective way of transporting large volumes of crude. If it is completed, the KXL could transport more than 800,000 barrels per day. Rejecting the pipeline would significantly restrict the amount of tar sands oil that could be moved to market.
Maximilian Auffhammer, a University of California economist estimates that in if no new pipelines are built, up to ten billion barrels of tar sands oil will stay under ground.’a0
“If no pipelines get built within and out of Canada and one has to rely on this rail scenario, capacity would run out this year and roughly 10 billion barrels stay in the ground,” Auffhammer says. “Not building Keystone XL would make the rail capacity constraint binding and therefore lead to slower extraction even in the short run.”
In the absence of the KXL there is insufficient transport capacity to realize the supply projections by Canadian Petroleum Producers. This holds true even if all other projects are built and rail capacity grows.
The growth of price competitive renewable energy will further undermine the viability of tar sands oil extraction. The proliferation of natural gas from fracking has decreased the need for Canada’s tar sands. This takes the wind out of the sails of one of the most powerful arguments put forth in support of the pipeline.
These are but seven of many good reasons why the Keystone XL may never be completed. Rejecting the KXL will signal an important step forward in our efforts to chart a new course where climate change and pollution are an integral part of policy decisions.
Richard Matthews is a consultant, eco-entrepreneur, green investor and author of numerous articles on sustainable positioning, eco-economics and enviro-politics. He is the owner of The Green Market Oracle, a leading sustainable business site and one of the Web’s most comprehensive resources on the business of the environment. Find The Green Market on Facebook and follow The Green Market’s twitter feed.
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