White House Rejection of Keystone Embraces U.S. Leadership Role in Tackling Climate Change

When is a Pipe Just a Pipe?

By Brandon Kline, Energy Law Fellow

Late last week, President Obama rejected the proposed Keystone XL Pipeline Presidential Permit application, even as project sponsor TransCanada requested the U.S. Department of State to suspend review of its application just days earlier.

Had the application been approved, the pipeline would have stretched 875 miles, from Western Canada and parts of Montana and North Dakota to the existing Keystone Pipeline system at Steele City, Nebraska. There it would have transported approximately 800,000 barrels a day of petroleum to existing refineries in the Texas-Gulf Coast area.

Because TransCanada’s project crosses international borders, the company was required to file an application for a Presidential Permit. The legal standard for approval of permits of this sort lies with whether the project will serve the U.S. national interest. See generally Executive Order 11423 on Pipelines (Aug. 1968); also see Executive Order 13337 on Issuance of Permits With Respect to Certain Energy-Related Facilities and Land Transportation Crossings on the Inter-national Boundaries of the United States (April 2004) (directing the Secretary of State to authorize those border crossing facilities that the Secretary has determined would “serve the national interest.").

The Obama Administration concluded that one more pipeline project would not serve American interests because it would not significantly boost our economy and strengthen energy security, nor would it decrease gas prices. In other words, “sometimes a pipe is just a pipe” (apologies to Dr. Freud).

Proponents of TransCanada’s application asserted the national interest threshold was met because the new pipeline would provide a secure, reliable source of Canadian crude oil to meet the demand from U.S. refineries and markets, supplying “critically important market access” to developing domestic oil supplies in Montana and North Dakota, and “reducing U.S. reliance on crude oil supplies from Venezuela, Mexico, the Middle East and Africa.” In writ, the Keystone XL Pipeline would have expanded the current system, and increased production of Alberta’s oil sands (a mixture of sand, water, clay and bitumen). Bitumen is oil that is too heavy or thick to flow or be pumped without being diluted or applying new steam extraction technologies.

As Keystone underwent review pursuant to the National Environmental Policy Act, interagency comments were submitted by eight federal departments and agencies, including the U.S. Environmental Protection Agency. EPA noted that the "foundational facts from which analysis of Keystone XL proceeds is that oil sands crudes have significantly higher lifecycle greenhouse gas emissions than other crudes. If GHG intensity of oil sands crude is not reduced, over a 50 year period the additional CO2 from oil sands crude transported by the pipeline could be as much as 935 million metric tons.” Keystone would have produced 17% more pollutants than conventional oil extraction. This is the equivalent of seven coal-fired power plants operating around the clock, or having 6.2 million cars on the road for 50 years, according to the National Resources Defense Council.

The nearly 1,700 mile-long project came to symbolize the partisan fervor over fossil fuels. “And all of this obscured the fact that this pipeline would neither be a silver bullet for the economy, as was promised by some, nor the express lane to climate disaster proclaimed by others,” Obama said.

At bottom, the political struggle over Keystone is a climate policy debate about what is the smartest way to invest in job creation and economic growth. To be sure, a construction project of continental scope results in near-term job gains. However, State Department analysis concludes that Keystone comes up short on long-term economic potential, ultimately creating only 35 permanent jobs once completed.

Meanwhile, a new study indicates global emission controls could save the U.S. economy trillions of dollars. Chelsea Harvey writes in the Washington Post that there is “a strong economic reason for the United States to support a strong international agreement to curb carbon emissions.”

The comprehensive report conducted by New York University School of Law’s Institute for Policy Integrity finds that “there are trillions of dollars to be gained at home from other countries’ climate mitigation efforts.” The report says “that other nations’ existing climate policies, by lessening the impacts of climate change, have already benefited the United States to the tune of more than $200 billion, and additional pledges” could save the U.S. $10 trillion more by the middle of the century.

America needs to invest in sustainable, clean jobs created from a clean, renewable energy foundation. Building this foundation requires taking steps to cut greenhouse gas emissions. We’ll never get there by constructing one more pipeline and continuing along the old-school path of a fossil fuel economy.