Time for Clear Thinking on Keystone XL

The most damning statistic about TransCanada’s Keystone XL pipeline can be found in management’s own discussion of the project: The estimated annual rate of depreciation for “Oil pipeline and pumping equipment” is “approximately 2%-2.5%.”[1] What this means is that the entire project is based on the assumption that it will be carrying the tar sands oil for the next 40-50 years.

Tar sands oil, it is broadly acknowledged, is dirty fuel. In addition to local and regional environmental impacts, the process of producing tar sands oil generates three times the greenhouse gas pollution as producing conventional North American crude.[2] Support of the keystone pipeline is therefore a commitment to supporting one of the dirtiest fuels on the planet for the next 40-50 years.

If we acknowledge the threat posed by greater storms, droughts, and temperature extremes—if we know that we will be living in an increasingly carbon constrained world, such a commitment does not make any sense. Of course, we are not going to stop consuming oil tomorrow. But it does not follow from there that we need to make a new, 40-50 year commitment to production of the most polluting form of oil.

Investment can be better directed. At minimum, enhanced oil recovery (EOR) is a way of tapping existing domestic sources with less carbon pollution than conventional oil. More importantly, investments in biofuels, electrification, and efficiency offer potentially higher returns than tar sands even prior to considering the cost of carbon pollution. But if you do consider carbon pollution, tar sands oil is not economic as compared to these choices, almost out of the starting blocks and certainly over time.

Joe Nocera, who has written in favor of approving the Keystone pipeline several times, recently noted that his last column on the Keystone Pipeline contained a serious error:

“In my column on Tuesday, I described the strategy of anti-Keystone XL pipeline activists as boneheaded. In writing about the effect of a carbon tax on Canada’s tar sands oil, I was pretty boneheaded myself. I said such a tax would likely make tar sands oil more viable. But, obviously, it would do the opposite, by decreasing demand for oil and making the already expensive tar sands oil even less economically appealing. What was I thinking?”

Joe deserves credit here for this candid admission, but let me venture to answer his question “what was I thinking?” Turns out he also favors a carbon tax as a way of making polluters accountable for carbon pollution. But, properly understood, a meaningful fee on carbon pollution would tend to undermine the economic viability of tar sands oil—over time perhaps entirely, making the Keystone Pipeline a complete waste. To be in favor of the project, he really needed to botch the logic of the policy, and so he did.

Bottom line: If you favor holding polluters accountable for pollution, there’s no rationale for going forward with Keystone’s 40-50 year commitment to dirty fuel. Joe Nocera is not the only pundit that clings to the contradiction of acknowledging the serious problem of carbon pollution, yet favoring the Keystone pipeline. It’s time for him and others to pull off the logic blinders. Denying a permit to the Keystone Pipeline should be, as he would say, “a no-brainer.”

 Chris Arndt is a private investor and a member of the NRDC Action Fund board.

 

 

 

 



[1] http://www.transcanada.com/docs/Investor_Centre/2012_TCC_MDA.pdf

[2] http://www.pembina.org/pub/2404

President Obama Doubles Down on Clean Energy

I just finished watching the GOP primary debate in South Carolina. It was a pretty entertaining two hours which kicked off with Newt Gingrich admonishing CNN for daring ask a question about his personal question (um, didn’t he try to impeach a President over something personal?) and ended with all candidates agreeing that any of them would be better then the guy in office now. But what I found most interesting was not what they talked about – but what was missing. Where was energy?

Governor Romney made one attempt to talk energy when trying to deflect criticism for not releasing his taxes but besides that, there wasn’t a lot of talk about what will be a central part of our future.

President Obama demonstrated bold leadership this week when he rejected the Keystone XL pipeline. Some are trying to marginalize the Keystone decision by saying Obama made it to please wacko environmentalists. Newt Gingrich went so far as to say, “President Obama has made it clear once again that he is committed to Saul Alinksy radicalism at the expense of working Americans.”

The trouble is that the people lined up against the pipeline don’t fit into a radical box. Republican lawmakers in Nebraska, ranchers and farmers from the Heartland, security hawks in the Armed Forces, and religious leaders from across the country don’t count themselves among the extreme left. They are simply Americans who don’t think a dirty pipeline to export Canadian oil to Asia markets is in our national interest.

GOP leaders have also tried to turn the Keystone decision into a jobs issue, but they can’t even agree on the numbers. One industry-funded study being quoted was so far-reaching that it includes new jobs for dancers and choreographers in its tally. Here’s the number that matters most: the company behind the pipeline, TransCanada, said in sworn testimony the project will only generate “hundreds” of permanent jobs.

Since the jobs numbers turned out to be thin, some lawmakers have tried to claim the pipeline would lower gas prices. But by diverting Canadian oil that would otherwise go to the Midwest, TransCanada has admitted the pipeline would increase the price Americans pay for Canadian oil by $3.9 billion. The other interesting thing is that the price of gas – when DOWN after the Keystone XL pipeline was rejected this week.

Next GOP leaders tried to position the Keystone decision as a sign he can’t stand up to his base. But even some pipeline supporters view Obama’s choice as a matter of fair play. They dislike that Republicans in Congress wanted Obama to ignore the extensive review process required by law for major infrastructure projects and approve a pipeline whose route hasn’t yet been confirmed—all within 60 days.

Governor Schweitzer told MSNBC, “As chief executive of Montana, if they ask me to approve of a pipeline with an incomplete application, I would have to reject it and I am the biggest proponent of this pipeline in America. These jokers in Congress that are trying to force the president to approve an incomplete application are just making mischief.”

What has impressed me most was that even as the Republican leaders were trying every argument they could, Obama doubled down. The same day he announced the Keystone decision he released his first 2012 campaign ad, and the topic was clean energy. It lays out the administration’s energy achievements, but it also positions clean energy as the path to the future.

In the end, that’s why Republicans and Democrats are fighting to win the energy messaging war in this race. They know energy is represents the trifecta of campaign-friendly values: patriotism, independence, and jobs.

The current Republican field’s collective vision for energy adds the value of conservatism — more of the same fossil fuels we have used for the past 100 years. Obama’s vision for energy layers on the values of ingenuity, innovation, leadership, and dominance in global markets. The dirty Keystone XL pipeline doesn’t have a place in the vision, and by rejecting, Obama has not only confirmed his clean energy leadership, but he has laid claim to powerful American values.

A win in the Keystone XL pipeline fight

While most of us were caught up in the emerging Herman Cain scandal of last week, big news came from the White House that President Obama called for a new review and year-long delay in the proposed Keystone XL pipeline project.

The announcement is a tremendous victory for all those who stood up against the Keystone XL pipeline and is a real testament for the strength of a people powered movement.

Here’s a great blog post by NRDC President Frances Beinecke on the administration’s decision to delay:

President Obama took a stand for the people of Nebraska today, and Americans everywhere, when his administration stood up to Big Oil to say we won’t put our people, waters and croplands at risk for the sake of pipeline profits and dirty fuels.

That kind of leadership takes courage, and I applaud the president for doing the right thing.

The State Department has decided to conduct a new review of the Keystone XL proposal. In its statement, officials said they will analyze alternative routes for the pipeline, but they also mentioned the need to consider “environmental concerns, including climate change.” The process will likely take until early 2013.

This is a major victory. For months, we’ve demonstrated the State Department’s review of the pipeline was flawed, inadequate, and possibly even biased. This project simply cannot withstand scrutiny. We are confident that after thorough review, President Obama will kill this dangerous pipeline once and for all.

Today’s announcement confirms the President’s commitment to building a clean energy future. In July, he proposed clean car standards that will cut vehicle carbon pollution in half, reduce our oil use by 3.1 million barrels per day by 2030, and create up to 150,000 American jobs. Earlier this week, the administration moved ahead with plans to limit carbon pollution from new power plants.

These measures will unleash innovation, make the air safer for our families, and put Americans to work bringing our cars and power plants into the 21st century. Dirty tar sands oil—the production of which releases three times as many greenhouse gases as conventional crude—has no place in that future.

To learn more, continue reading “Victory in Keystone XL Pipeline Fight: Obama Administration Calls for New Review and a Year Delay.”

Watch: New Video on Stopping the Keystone XL Pipeline

Have you seen NRDC Action Fund Chairman’s Bob Epstein’s latest video on stopping the Keystone XL pipeline yet? We especially love the musical backdrop sung by American folk musician Laurie Lewis.

The lyrics, while catchy, really get to the heart of issue and spell out exactly why there’s just no good reason for Keystone to build the pipeline beyond their own profitable motives.

“Valero Oil of Texas is not the oil for me, you want to pump the tar sands to your refinery but pumping gunk from Canada to the Gulf of Mexico is a pipeline to disaster and to keystone we say no.

A pipeline to disaster and to keystone we say no!

Valero Oil of Texas you lobby for the pipe, you talk about employment but we know that’s just hype. We’d rather create good jobs and a strong economy stop subsidizing oil and fund cleaner energy.”

Don’t forget to join us on November 6th in Washington when thousands of concerned citizens and activists like NRDC Founding Director John Adams led by Bill McKibben gather around the White House to urge President Obama to reject the Keystone XL pipeline.