Keystone XL Pipeline Gone for Now – Nov 7, 2015

Today we will do cover one news item, the Keystone XL Pipeline happenings for the week of November 2, 2015.

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The Big Keystone Moment Finally Arrives

It was a crazy week for the energy policy debate of the century, the Keystone XL Pipeline.  Lets take it day by day:

  • Monday – Press Secretary Josh Earnest tells reporters “Our expectation at this point is that the president will make a decision before the end of his administration on the Keystone pipeline, but when exactly that will be, I don’t know at this point.”  TransCanada, the company that owns the project, asks the State Department to “pause” the review.  Presumably, the company realized it was going to get a “no” and hoped to wait for the next President.
  • Tuesday – Josh Earnest tells reporters the Administration is not sure what to do with TransCanada’s “unusual” request to pause, as “the process has taken an extensive amount of time to complete.”
  • Wednesday – State Department Press Secretary John Kirby says the State Department will not pause the review process because “there is no legal requirement to do that” and ” a lot of work has gone into this to date and the Secretary wants that work to continue.”
  • Thursday – Rumors fly…
  • Friday – The big day finally arrives, and the President rejects the Keystone permit because it would have “undercut” America’s leadership on climate change, and in order to keep that leadership “we’re going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky.”

Before trying to read into the substance of this decision, it is important to understand where the activism against the pipeline is coming from.  Most would agree that it is trivial in the big picture, but as David Roberts at Vox explains, the symbolism is important:

For whatever reason — a lot of tenacity, luck, and good timing — Keystone sparked something. Hundreds of thousands of people got engaged. If VSPs think they can get hundreds of thousands of people in the street for a revenue-neutral carbon tax, they are welcome to try.

Climate change is inherently difficult to organize around; it’s big, abstract, and incremental. By the same token, broad, economy-wide policies to address it are also big, abstract, and incremental.

Now, onto the substance in the Record of Decision from the State Department.  First, it is important to understand that there are really no rules:

The determination is made pursuant to the President’s Constitutional authority. No statute establishes criteria for this determination. The President or his delegate may take into account factors he or she deems germane to the national interest. With regard to the proposed Project, the Secretary has considered a range of factors, including but not limited to foreign policy; energy security; environmental, cultural, and economic impacts; and compliance with applicable law and policy.

The State Department, and the President, repeatedly downplayed the benefits of the pipeline:

The Economy: “When compared with the GDP in 2012 (the figure available when the Supplemental EIS was drafted), the proposed Project’s contribution represents approximately 0.02 percent of annual economic activity across the nation.”

Gasoline Prices:  “[T]he proposed Project is unlikely to have a meaningful effect on domestic fuel prices. While crude oil prices matter to those involved in producing oil or refining oil into products, most Americans are mainly concerned with the price of gasoline and other refined products.”

Energy Security:  “[T]he significance of the pipeline for U.S. energy security is limited. [I]n most scenarios the proposed Project is unlikely to change significantly the pattern of U.S. crude oil consumption.

Past analysis, including the January 2014 Supplemental Environmental Impact Statement, found the pipeline irrelevant to carbon emissions “would not significantly increase carbon emissions because the energy resource will be tapped whether or not the potentially lucrative pipeline is finished.”  Many environmentalists hoped that the State Department would basically amend it analysis to show that killing the pipeline would kill the oil sands.  Instead, the State Department was very frank that the decision was about symbolism:

The broad perception of the oil that would be carried by the proposed Project is that it would be “dirty” – more GHG-intensive over its lifecycle than alternate sources of crude, owing to the combination of the use of the heavy crude itself with the far more GHG-intensive process of extraction. This perception is supported by the findings in the SEIS. Whether or not that oil would still find other transport to market in the absence of the proposed Project (that complex issue is analyzed in the Supplemental EIS), the general perception is that a decision to approve the pipeline would pave the way for the long-term and intensive extraction and importation of that oil into the United States. Issuing a permit for the proposed Project would thus be understood at this time as a decision to facilitate particularly GHG-intensive crude imports into the United States for the long term, undermining the power of U.S. example as a leader in promoting the transformation to low-carbon economies.

Therefore, a decision to approve this proposed Project would undermine U.S. objectives on climate change; it could call into question internationally the broader efforts of the United States to transition to less-polluting forms of energy and would raise doubts about the U.S. resolve to do so. In turn, this could raise questions for some countries about how aggressively they should combat climate change domestically, and potentially reduce the United States’ ability to advance climate and broader objectives with allies and other partners in various bilateral and multilateral contexts.

The White House made it clear that the pipeline itself is not the problem, it is part of a broader Administration-wide effort to cut back on fossil fuels.  Josh Earnest later included shutting down the arctic as part of the President’s symbolic efforts.

The reaction was not unexpected.  One interesting item came from Sen. John Hoeven (R-ND), one of the pipeline’s biggest supporters in Congress.  He said the State Department requested the pause and then rejected it.

The Presidential candidates all weighed in:

The new Speaker of the House got in the game:

Union leaders also stuck with the project, “After years of holding this project hostage by delaying a decision on the Keystone XL pipeline, the President turned his back on hardworking Americans, who overwhelmingly support the pipeline. Manufacturers, all workers and all Americans deserve far better than to be treated so poorly.”