Would An Emissions Deal Break the Keystone XL Deadlock?

• A Canadian proposal to facilitate US approval of the Keystone XL pipeline by committing to greenhouse gas reductions gets to the essence of principled objections to the project.
• The offer provides a chance for defined, quantifiable emissions reductions, instead of the highly uncertain emissions consequences of rejecting the permit for this pipeline. 

A couple of weeks ago Bloomberg and others reported that the Canadian Prime Minister had sent a letter to President Obama, proposing to work with the US to reduce greenhouse gas emissions from the oil and gas sector as a way to facilitate US approval of the Keystone XL pipeline (KXL.) It seemed an obvious way to break the current deadlock . If opposition to the pipeline is based mainly on the greenhouse gas emissions profile of Canadian oil sands crude--accurately or not--then environmentalists should have welcomed this overture. Instead, environmental groups have urged the President to reject both the offer and the pipeline.

You would never know it from protest slogans conflating all types of air pollution as if they were identical, but the characteristics and effects of greenhouse gases (GHGs) like CO2 are very different from the smog-forming emissions from automobile tailpipes or the sulfate pollution from coal power plants. For that matter, air containing 400 ppm of CO2 (0.04%) is no more harmful to breathe than pre-industrial air with 280 ppm of CO2. More importantly, the climate consequences of each ton of CO2 emitted to the atmosphere are effectively the same as for every other ton, regardless of where they are emitted or from what source. While scientists can distinguish CO2 from fossil fuel combustion from the CO2 you just exhaled, based on differences in the ratio of carbon isotopes they carry, their effect on global warming is essentially identical.

That sounds trivial, yet it has great value for expanding our options for managing the accumulation of these gases in earth’s atmosphere. Not only don’t we have to treat GHGs the way we do local air pollutants, but it can be more effective not to. In practical terms, that means that unlike the well-established approaches for mitigating smog, it isn’t necessary to tackle all GHG emissions at the source, particularly when it’s expensive or impractical to do so. Saving a ton of CO2 by preventing deforestation or improving vehicle fuel economy is exactly equivalent in its effect on the climate to reducing a ton of CO2 emitted from producing oil, which accounts for less than 20% of the emissions from the oil value chain.

Prime Minister Harper’s proposal has been greeted with skepticism by some environmental groups, including a representative of Sierra Club Canada who expressed doubt that Mr. Harper was serious. I am in no position to comment on that, other than to point out that entering into negotiations on a proposal such as this one would be an excellent test of his government’s seriousness about reducing emissions.

In fact, a proposal to approve Keystone in exchange for reducing emissions provides a test of the seriousness of all the parties involved. If the project is worth pursuing for the Canadian government and Canada’s oil sands producers, then it should be worth additional efforts on their part, over and above those already undertaken, to reduce emissions from oil sands production and to find suitable emissions offsets elsewhere. Of course it’s also a test of how serious President Obama was when he  explicitly linked approval for KXL to “whether or not this is going to significantly contribute to carbon in our atmosphere.” And because the administration’s protracted delays in approving or rejecting the project can fairly be attributed to political considerations, the proposal also tests the seriousness of “movement” organizations like 350.org that influence the politics of Keystone within the President’s political base.

Opponents of the Keystone XL project who are genuinely concerned about addressing climate change ought to at least be willing to consider a framework that links approval of this project to quantifiable and verifiable reductions in greenhouse gas emissions on a comparable scale. Since the determination of such reductions depends on the assumptions governing the alternative state of the world against which these reductions would be compared, that would require a willingness to accept a reasonable set of baseline assumptions about what would happen if this pipeline were not permitted to cross the US border. While I don’t pretend that would be easy, I have trouble seeing how one could reject such a concept outright and still claim to adhere to sound science and consensus policies.

This strikes me as an opportunity to embrace the kind of constructive and responsible compromise, the absence of which in our government so many Americans have lamented. Or, to put it bluntly, is opposition to Keystone really about greenhouse gas emissions, or is it just about symbolism?

The beauty of this offer, if it has actually been made and depending on its details, is that it provides President Obama with a potential two-fer: a pathway for approving a project that would please a large majority of Americans, along with a way to obtain significant greenhouse gas reductions--also pleasing many Americans--without requiring the highly unlikely enactment by Congress of comprehensive climate legislation. If we can do a deal with Russia over Syrian chemical weapons, there should be no impediment to doing a deal with Canada over CO2 emissions.

A different version of this posting was previously published on Energy Trends Insider. 

The Keystone XL Pipeline: Pyrrhic Victory Ahead?

Last weekend thousands came to Washington, DC to protest against the Keystone XL pipeline project, just a few days after a smaller protest in front of the White House resulted in a batch of arrested celebrities.   The State Department's decision on the cross-border permit is expected within a few months.  However, unless the President devises an unexpectedly Solomonic solution, one side or the other will come up short. That much is obvious, but I'd suggest that it's also worth considering the possible unintended consequences for the winning side.  Keystone could prove a Pyrrhic victory for either environmentalists or the energy industry.

That assessment starts with the fact that both sides have contributed to exaggerating the stakes out of all proportion, especially on the part of those concerned about the climate impacts of a new pipeline to carry crude derived from Canada's oil sands, or "tar sands."  With Nebraska having signed off on a new route avoiding the Sand Hills, the entire question now hinges on its global greenhouse gas (GHG) emissions, which would be far less than some claim. Without belaboring this point--not the aim of this posting--you needn't take the word of Transcanada, the pipeline's owner on this.  It's straightforward to demonstrate that any expansion of oil sands production would still account for a small share of Canada's GHG emissions, which are in turn a thin sliver of global emissions.  Such facts are easily overshadowed by pronouncements such as the oft-cited "game over" assertion from NASA's James Hansen, reminding us that even Ph.D.'s should be cautious when straying so far beyond their expertise.

Likewise, supporters of the pipeline have made numerous expansive claims about its potential economic and employment benefits.  Even if those are accurate, they're a lot less relevant at this stage of the debate than they were a year or two ago.  This issue has grown far beyond an argument about the facts, or even about a pipeline.  It has become a battle over a symbol, and the responsibility for that development rests with the administration, which declined multiple opportunities to issue a simple up-or-down decision, even when the Congress attempted to force the President's hand in late 2011.  Blame it on the election cycle, or unwillingness to disappoint one or another important constituency.  But extended this long, indecision turned the project into a giant version of Schrödinger's Cat, existing in a sort of limbo that compels attention.

When the pipeline's fate is finally revealed, the consequences could match its inflated, symbolic stature, rather than its actual importance as an energy project. The possible blowback is probably easier to imagine if the pipeline were approved.  Outraged environmentalists would be unlikely simply to pack up their signs and go home.  Aside from seeking new ways to impede the project, they might turn their attention to other energy projects that are currently uncontroversial, or at least less so than Keystone XL.  They might also choose to vent their anger on an administration they were counting on to see this argument their way.  The resulting fallout in lost voter enthusiasm might hinder Democratic candidates in the 2014 mid-term elections. 

Now imagine what might happen if the pipeline were rejected.  As I understand the process, that would require the new Secretary of State to rule that the project is not in the US national interest.  That would constitute a serious snub to our largest trading partner and largest source of imported crude oil.  Canada won't cut us off, but its government and industry would certainly intensify their efforts to diversify their oil export destinations, by means of other options headed either west or east, by pipeline or by rail.  The oil would still get through, but the relationship between the US and Canada would suffer, and environmentalists would be seen as responsible.  In any case, what won't happen is the shutdown of oil sands development. If anything, making this oil harder to bring to market could lend further support to high oil prices, and paradoxically preserve the incentive to produce more of it or gain access to these supplies.

The outcome that should worry environmentalists most about that scenario is the prospect of up to 800,000 barrels per day of crude oil loaded onto rail cars--roughly 1,000 a day of them--and moving all over North America.  Aside from the increased emissions associated with that mode of transport, compared to pipelines, the risks of a serious accident or spill would multiply.  If such an event occurred, it would attract significant attention from media that wouldn't be shy about reminding viewers why this oil was in rail cars in the first place.  But even without an accident, opponents of the pipeline are placing an implicit bet that oil prices will stay flat or decline if the pipeline isn't built.  If they go up instead, they stand to bear part of the blame, whether accurately or not. 

Stopping the Keystone XL pipeline won't result in appreciably lower US or global oil consumption, or a material change in global GHG emissions.  The key to oil's emissions lies on the consumption side, where most of them occur, and thus in focusing on the hundreds of billions of dollars per year spent by developing and transitional countries on sheltering their industries and consumers from the price of oil, along with countries that still generate significant amounts of electricity from oil.  Nor would approving the pipeline restore the US economy to its pre-financial-crisis growth rate.  The energy security benefits that it would bring, like the climate benefits opponents seek, are more about reducing risk.  Yet whether or not you agree with the editors of Bloomberg that keeping "Canadian oil flowing to U.S. refineries in the most efficient way, within the bounds of safety" is the principle that should guide Secretary of State Kerry, no one has benefited from dragging the decision out this long.  The winners might end up regretting that as much as the losers. 

Oil Sands Anxiety Is Overblown

As I was catching up on a two-week backlog of news after my vacation, I ran across a New York Times editorial with the promising title of "Tar Sands and the Carbon Numbers." Thinking that perhaps the Times might have woken up to the necessity of comparing the lifecycle emissions from oil sands to those from other crude oils, I was disappointed to find its editors perpetuating the common misunderstanding concerning these emissions when viewed only from an oil-production perspective. That's a shame, because it results in the scape-goating of Canadian producers and pipeline companies while conveniently avoiding the soul-searching that ought to accompany a clear understanding that, whether we're talking about oil sands or conventional oil imported from any other source, the vast majority of the lifecycle emissions will occur here, when the products into which these oils will be refined are consumed. It is also condescending toward the sovereign responsibility of our NAFTA neighbor for managing their national emissions under the Kyoto Protocol, which they ratified but we didn't.

The pending State Department review of the proposed Keystone XL pipeline project linking Alberta's oil and oil-sands projects to Gulf Coast refineries has become a hot-button issue for US environmental groups. Producing oil from oil sands, which were more commonly called tar sands until that became a term of disparagement, certainly involves more environmental consequences than most--though not all--conventional crude oils. Since US groups haven't been very successful targeting the oil sands projects in Alberta, where they contribute significantly to Canada's oil output and overall economy, the export pipeline has become a target of convenience. From my perspective, the angst about pipeline safety and acidic bitumen is mainly a red herring; the oil industry routinely handles other crude oils of similar sulfur levels and acidity, usually by adjusting the metallurgy of the pipes and vessels involved. The real issue here is greenhouse gas emissions, which the Times and most other critics of oil sands narrowly compare to those from producing conventional oils.

The Environment Canada report cited by the Times indicates that oil sands production and upgrading result in emissions about 70% higher per barrel than for the production of Canada's average conventional oil. That's in the range of other estimates I've seen. However, what the Times fails to mention is that such "upstream" emissions only account for a fraction of the total lifecycle emissions attributable to any oil. By far the biggest portion--even for oil sands--comes from the combustion of petroleum products by end-users.

So if at least 70% of the emissions from oil sands crude occur in the US, rather than Canada, and if the lifecycle (well-to-wheels) emissions from oil sands only average around 15% higher than for the average US refinery's crude slate, while emitting little or no more than some commonly imported crude oils from other countries, are the XL pipeline's opponents exaggerating its impact? I believe they are, unless they're also willing to take on imports of consumer goods and other products from higher-emitting countries like China. That would be difficult to justify to the World Trade Organization, considering that the US doesn't have a statutory limit on its own greenhouse gas emissions. It might also put us in an awkward position with regard to our exports to countries that have adopted strict emissions reduction targets.

Meanwhile we shouldn't forget that under UN agreements it is Canada that bears responsibility for the extra emissions that oil sands generate in Alberta. The Environment Canada report indicates that oil sands are likely to contribute 11.7% of Canada's GHG emissions by 2020, up from 6.7% in 2005, when Canada's share of global GHG emissions stood at less than 2%. The expected increase in oil sands output would account for essentially all of the projected 7% rise in Canada's emissions over that interval, an amount equivalent to 0.1% of current global emissions. The means by which Canada could address those incremental emissions include improved technology, offsetting cuts in other sectors, emissions trading and offsets purchased from other countries, or the Canadian government could simply choose to restrict oil sands output. Whatever path they choose, we have plenty of our own emissions to consider without going into a tizzy over a Canadian sector that currently emits roughly as much as US livestock waste management.

Trying to control the emissions from oil sands by blocking this pipeline is a perfect illustration of the difficulty of attempting to tackle a complex global environmental problem by focusing on isolated measures that only bear indirectly on the outcomes that matter. The weakness of the Times' argument is reflected in the following sentence, referring to Canada's policies: "The United States can't do much about that, but it can stop the Keystone XL pipeline." The implication seems to be that we would be better off if Canada exported its oil sands to developing Asia, their next best market, relieving us of any associated guilt, even if it made no actual difference in global emissions. I hope that when the State Department decides this matter, it gives appropriate weight to the fact that, other than fuel economy improvements in the US car fleet, our energy ties with Canada represent the single most effective energy security measure undertaken by this country since the oil crises of the 1970s.