The Fatal Flaw in the Case for Keystone
The US State Department recently delayed their final decision about the Keystone XL pipeline, [1] which would transport heavy oil from Canada’s Alberta tar sands to US refineries on the Gulf coast. Proponents of the pipeline claim that it will create many US jobs and improve US national security, but in neither case are these benefits likely to be significant. [2] [3] They also claim (with some justification) that the pipeline would reduce the risk of local environmental damages compared to other shipping methods, but that argument assumes that the oil will flow from Alberta one way or another.
It is this last assumption that is the fatal flaw in the arguments of pipeline proponents, but it is a view that is widely shared. For example, the State Department’s 2013 Draft Supplemental Environmental Impact Statement assumes that approving the pipeline would have no effect on future production of tar sands:
Approval or denial of any one crude oil transport project, including the proposed [Keystone XL] Project, remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the U.S.[4]
The legalistic focus on “any one crude oil transport project” guarantees that the tar sands will be exploited to their maximum potential. Each incremental increase in pipeline capacity by itself may not contribute much to additional tar sands production, but many pipelines to the tar sands would be approved if we study each in isolation, and a significant increase in tar sands production would be the perverse result.
Conversely, we know that constraints on pipelines to the tar sands would limit overall tar sands production, because the Canadian oil industry says so. In an explicit acknowledgement of the importance of future pipelines for increased exploitation of tar sands, the Canadian Association of Petroleum Producers recently described their forecast that Alberta oil sands production would be 2.5 million barrels per day in 2030 if “the only [pipeline] projects to proceed were the ones in operation or currently under construction”, but twice that if additional pipelines are built.[5] This conclusion was reinforced by a recent Goldman Sachs analysis of tar sands economics.[6]
Of course, Canada may approve other “in country” pipelines to Alberta, but Transcanada chose the Keystone XL pipeline route because it was the cheapest and easiest method to move heavy oil to refineries with capacity to process it. The other options must be less desirable because otherwise Transcanada would have chosen those instead. As a case in point, British Columbia recently rejected a pipeline to the Pacific that was one of the contingency routes in case Keystone XL was not approved.[7]
The tar sands are 14-20% more carbon polluting per unit of energy than traditional oil, when considering the full life-cycle of exploration, extraction, and consumption.[8] Using this fuel therefore has an opportunity cost, because it yields less energy per ton of carbon emitted than other fossil fuels like natural gas, and much less than renewable sources like solar or wind (which have emissions associated with their manufacturing, installation, and decommissioning).
We can emit a fixed amount of carbon over the next few decades and stay under the two Celsius degree warming limit that the US and other major countries accepted in 2009 at Copenhagen (that’s our “carbon budget”).[9] Contrary to the arguments of Keystone proponents, approving the pipeline (and the ones that will inevitably follow) will accelerate exploitation of the tar sands and eat up the remaining carbon budget more rapidly than would alternatives. That’s why the pipeline is counter to the interests of the US and the world, and why the US State Department should not approve its completion.
Ultimately, we’ll need to do what former CIA director Jim Woolsey recommends: turn oil into salt.[10] That formerly strategic commodity is now something we buy cheaply at the supermarket, made so by alternatives (like refrigeration) that rendered its former use in meat preservation obsolete. We need to buy time until we can more widely deploy alternatives to fossil fuels, and slowing the exploitation of tar sands is one good way to do just that.
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Jonathan Koomey, Ph.D., is a Research Fellow at the Steyer-Taylor Center for Energy Policy and Finance at Stanford University. He’s also the author of Cold Cash, Cool Climate: Science-based Advice for Ecological Entrepreneurs (Analytics Press, 2012) and coauthor of Energy Policy in the Greenhouse (John Wiley and Sons, 1992).
[1] State Department decision delayed to late 2013 or early 2014: http://www.reuters.com/article/2013/05/11/us-usa-keystone-delay-idUSBRE94A00T20130511
[2] the number of permanent jobs associated with operating the pipeline number in the dozens, while the direct employment from pipeline construction totals 3,900 temporary jobs lasting one to two years (US Department of State. 2013. Draft supplemental Environmental Impact Statement for the Keystone XL Project. March. [http://keystonepipeline-xl.state.gov/draftseis/index.htm], Executive Summary, p. ES-14.) In neither case is the number significant for the US economy, which created about 750,000 jobs in the first four months of 2013. http://www.bls.gov/news.release/empsit.b.htm
[3] Oil trades on a global market where supply and demand determines prices, so there is little demonstrable national security impact from substituting Canadian heavy oil for that shipped from other countries. Replacing oil with alternatives is the only sure way to reduce significantly the risks associated with oil dependency (Lovins, Amory B., E. Kyle Datta, Odd-Even Bustnes, Jonathan G. Koomey, and Nathan J. Glasgow. 2004. Winning the Oil Endgame: Innovation for Profits, Jobs, and Security. Old Snowmass, Colorado: Rocky Mountain Institute. September. [http://www.oilendgame.com])
[4] US Department of State. 2013. Draft supplemental Environmental Impact Statement for the Keystone XL Project. March. [http://keystonepipeline-xl.state.gov/draftseis/index.htm], p.1.4-1.
[5] CAPP. 2012. Crude Oil: Forecast, Markets, and Pipelines. Calgary, Canada: June. [http://www.capp.ca/forecast/Pages/default.aspx]
[6] http://online.wsj.com/article/SB10001424127887324069104578531713102125222.html
[7] http://www.guardian.co.uk/environment/2013/jun/01/tar-sands-canada-pipeline-enbridge
[8] Lattanzio, Richard K. 2013. Canadian Oil Sands: Life-Cycle Assessments of Greenhouse Gas Emissions. Washington, DC: Congressional Research Service. March 15. [http://www.fas.org/sgp/crs/misc/R42537.pdf]
[9] Koomey, Jonathan, and Florentin Krause. 2009. Why 2 degrees really matters. [http://thinkprogress.org/romm/2009/12/06/205058/copenhagen-two-degrees-warming-target/]
Koomey, Jonathan G. 2012. Cold Cash, Cool Climate: Science-Based Advice for Ecological Entrepreneurs. Burlingame, CA: Analytics Press. [http://www.analyticspress.com/cccc.html]
[10] Woolsey, R. James, and Anne Korin. 2007. “Turning Oil into Salt." National Review Online. September 25. [http://www.nationalreview.com/content/turning-oil-salt]
