This was first posted on Carnegie Council's online magazine, Policy Innovations, on August 15, 2011. The opinions expresssed in this article are those of the author, and not necessarily those of the Carnegie Council.
You are sitting on the porch of your Oklahoma farmstead, listening to the corn grow after a hard day mending fences. An ice-cold beer sweats next to you. As the sun tumbles toward the horizon your mind bends to that TransCanada check you deposited last year: $2,123 for the right to run a pipeline under your property. What should you do with it? Maybe it's time for that Orlando vacation you've been promising the kids.
And while you dream of watching a rocket launch at Kennedy Space Center that's when it happens: A joint gives way in the 36-inch steel tube, releasing 100 barrels of diluted bitumen from Alberta into your land.
Before you know it a backhoe is there trying to figure out what went wrong. It's too soon to tell but you get the suspicion your water well might be affected, and you start to worry that your property value just dipped like a bad day on the stock market. You had heard about that spill on the Yellowstone River but the guy with the clipboard and the solid handshake said it was rare: It can't happen here.
Is this a likely scenario? It is certainly one I hope nobody suffers. The track record for the existing Keystone pipeline doesn't look good so far—12 spills during its first year of operation. Most of them have been minor, though a recent spill in North Dakota released 500 barrels. This doesn't set a good precedent for the additional pipeline that TransCanada has proposed to build between the tar sands of northern Alberta and refineries on the U.S. Gulf Coast.
DETERMINING THE NATIONAL INTEREST
The State Department will finalize its environmental impact statement for the Keystone XL extension this August, and the release of that report will be followed by public meetings and a 90-day period during which other federal agencies will be able to comment on whether the pipeline would be in the national interest. At the conclusion of the review process, Secretary Clinton will make a national-interest determination on whether to permit the project. The responsibility falls to her because the pipeline would cross an international border, and the State Department hopes to make a final decision by the end of 2011.
So what exactly is the national interest here? One place to look is the State Department's rationale from the original Keystone application. The key points were that Keystone would increase the diversity of supply, decrease the transport distance, deliver oil from a stable partner, lessen marine transportation with its associated security and environmental risks, and provide additional supply to make up for declining imports from other countries. Let's take these one by one.
Additional supply: Is additional supply in the national interest? Not if we are trying to get off foreign oil, as every administration since Nixon has stated. Reducing demand is the real way to accomplish this. Is additional supply even necessary? The government's own data show it is not.
Decreased distance: While Canadian oil is close at hand, the shortest distance is the one not traveled—the barrel not burned through efficiency measures, replacement technologies, or better urbanism. Also, distance cannot be separated from cost. As an analysis commissioned by the U.S. government shows, the transportation costs would be cheaper for Canada were it to build a pipeline to the British Columbia coast and ship the bitumen to meet demand growth in Asia.
Less marine exposure: Maritime issues should continue to be a major and valid concern, given the security costs of protecting Middle East supplies, and the history of environmental disasters such as the Exxon Valdez and BP's Deepwater Horizon.
Stable partner: The stability factor continues to be relevant for the Keystone extension, though it only gains importance insofar as KXL is able to replace oil from unstable partners. Canadian bitumen is seen by some as a solution to dwindling supplies of heavy crude from Mexico and Venezuela, but there is doubt as to whether Keystone XL would actually offset any Middle East imports. Accomplishing this latter goal seems likeliest under the following scenario: building KXL, with no further pipeline expansion across British Columbia, and with smart energy and environmental policy choices that reduce demand. Given that these conditions are far from guaranteed, it calls into question the energy security usefulness of building the pipeline at all.
Supply diversity: While Keystone XL would increase supply volume it clearly does nothing to increase supply diversity beyond the original Keystone line. Keystone currently has spare capacity and the XL extension is projected to have spare capacity for decades to come.
THE MISSING LINK
Despite the shift from Bush to Obama it's hard to imagine that much has changed in the conventional conception of the "national interest" since the original Keystone pipeline was approved. The most glaring omission in both administrations has been any action to stop the climate emissions associated with burning tar sands oil. As environmental writer and activist Bill McKibben points out, the Athabasca deposits are big enough to raise the atmospheric concentration of carbon dioxide by several hundred parts per million—an amount that all major scientific bodies associate with severe warming of the planet.
If Secretary Clinton wishes to leave any sort of revolutionary legacy from her tenure in the State Department, denying Keystone XL would be it. She could firmly state that further global warming is not in the national interest of the United States. I doubt that the drought-stricken farmers of the American heartland would disagree with her.
Reducing the price of gasoline for families struggling to pay their bills is also in the national interest. But would Keystone XL actually make gas any cheaper? No. Multiple analyses point to rising gasoline prices, especially in the Midwest, if Canadian crude is able to reach global markets via the U.S. Gulf Coast.
In the American West people have already spoken up, denying Exxon the permits to move massive tar sands equipment through some of their most beautiful and pristine landscapes. And landowners along the proposed pipeline route have refused use of their property, forcing TransCanada to resort to eminent domain tactics.
WHAT IS CANADA THINKING?
Canada's stance on climate change defies logic. As the Globe and Mail recently reported, the government's own studies show that the projected increase of emissions from bitumen production and upgrading will negate emissions reductions from other sectors—an increase of 62 Mt per year by 2020, tripling the 2005 levels. The trend is clear: "with no further government actions" to reduce carbon, Canadian emissions will continue to rise and the country will never meet its targets of getting 17 percent below 2005 levels as outlined in the Copenhagen Accord.
Meanwhile, the climate change evidence is staring Canada in the face in the form of extreme weather and invasive species. Wildfires and flooding ravaged northern Alberta this year, though oil sands producers such as Cenovus Energy seem to have taken it all in stride, with profits more than tripling compared to this time last year.
Beetles are also a threat to the boreal forest that sits atop the tar sands. The warming climate enables the insects to infest new regions and kill trees in massive numbers. This releases CO2 through decay, and harms the forest's overall ability to absorb carbon.
Canadian government scientists estimate that the beetle-infested regions of British Columbia alone will contribute 270 Mt of carbon by 2020. Tar sands excavation thus locks Canada into a climate feedback cycle, further destroying its own environment and climatic resilience.
CALL IT WHAT YOU WANT, IT STILL ISN'T ETHICAL
As part of a public relations effort to sell the world on tar sands, the Canadian government has recently doubled down on referring to its bitumen as "ethical oil," in contrast to barrels from despotic regimes. It's a noble sentiment with a superficial ring of truth, but would a new pipeline actually get the United States off Middle East oil? No. Only a low-demand scenario has a hope of accomplishing that. According to a report from the EnSys group, commissioned by the U.S. Department of Energy, "the Keystone XL pipeline would not of itself have any significant impact on U.S. oil imports."
As Brant Olson writes on the Rainforest Action Network blog, "access to Gulf coast export terminals means the US has to compete with everybody else for Canadian crude." This access to global markets is what would drive up prices at the Midwestern refineries. And if Canadian oil were really all that ethical, oil lobbyists wouldn't have to resort to using fake, "citizen" social media accounts to squawk favorable tar sands sentiments.
But really the most interesting thing about Canada's stance on "ethical oil" is that it raises a very important question: Why not ethical everything? If oil is going to be judged by its ethical merits, then shouldn't all goods and services that are traded globally meet this standard? I doubt that conservatives in the Canadian government or anywhere else are ready to tackle this question. It entails linking environmental and human rights concerns to all our trading decisions, essentially boycotting regimes deemed unfit for trade.
It's hard to believe that America needs more tar sands oil when you look at President Obama's recent move to double vehicle fuel efficiency over the next 15 years. As the Washington Post reports, his new fuel policy will "reduce U.S. oil consumption by 2.2 million barrels per day by 2025," whereas the Keystone XL extension would double the current pipeline capacity to around 1.1 million bpd. Even the U.S. Energy Information Administration predicts that U.S. imports of liquid fuels will fall due to increased domestic production and greater fuel efficiency—and that prediction was made prior to the new fuel efficiency standards.Companies that profit excessively when average wallets get pinched should share the burden.
Yet increasing fuel efficiency will have a perverse side effect: The United States doesn't have enough revenue to maintain its existing transportation infrastructure unless something is done to fix the gasoline tax. That's why it's encouraging to see dynamic policy ideas such as the plan put forth by Bill Bradley, Tom Ridge, and David Walker. Their idea is to establish a "value-added oil-security fee at the refinery or point of importation. …a fixed percentage based on the price of a barrel of oil." This would be coupled with a countercyclical gasoline tax that decreases when the price of oil rises—the effect being price stability at the pump.
Bradley, Ridge, and Walker root their argument in a sense of fairness: Companies that profit excessively when average wallets get pinched should share the burden. They see this as a conceptual shift "from a straight 'user pays' approach (gasoline consumers) to a 'beneficiaries pay' system (both producers and consumers)"—since both "oil companies and consumers benefit from transportation investments."
The emissions problem needs more of this type of innovation and imagination—change we can drive in—not the fossilized logic of the oil incumbents. The people who claim that America needs more dirty Canadian oil would be wise to take note of the VW One-Liter Car. It gets 235 mpg and Volkswagen bumped up its production date due to declining costs in manufacturing carbon fiber. A silver bullet it is not, but it's emblematic of the solutions that are possible when we think outside the barrel.
And if the technological change argument isn't enough, look to Japan, where people in the Tokyo area have voluntarily cut electricity usage by 15 percent in order to manage post-tsunami shortages. This proves that there is a higher degree of adaptability and elasticity in our complex energy systems than the major energy players would allow.
AN OPEN LETTER TO SECRETARY CLINTON
The ball will soon be in your court to approve or deny the Keystone XL pipeline. I hope you will do your utmost to maintain good relations with our Canadian friends and to end our mutual addiction to dirty fuels. I sincerely hope you won't be known as the secretary of state who built us a pipeline to nowhere.
Keystone XL taps into a deep concern that is currently resonating around the world—from Tahrir Square to Tel Aviv, touching Madison and now London. Can we establish and maintain rational governance that serves the people's needs? Albert Einstein defined insanity as doing the same thing over and over again and expecting different results. Building a second Keystone pipeline would fit that pattern exactly:
We know that climate change is happening.
We know that burning fossil fuels causes it.
We know that dirty fuels harm human health.
We know that climate change is harming Canada.
We know that Canadian tar sands are among the dirtiest fuels.
Our EIA predicts that we won't need to import more liquid fuels.
Obama has strengthened fuel efficiency to further decrease gasoline demand.
Keystone XL will raise gas prices.
Keystone XL will have a negligible impact on U.S. oil imports from unsavory regimes.
Given what you know—what we know you know—I urge you to "get on the right side of history" and deny expansion of the tar sands pipeline. The best way to sequester carbon is to keep it where it is. Clean air, clean water, and a stable climate are in the national interest.
- Canadian Tar Sands: There's No Such Thing as Ethical Oil (or Nuclear Power) (Carnegie Ethics Online)