President Joseph R. Biden canceled the Keystone XL pipeline permit on his first day in office, despite the pipeline being completed at the border, the greenhouse gas emissions from the pipeline’s operation becoming carbon-free by 2023, the Canadian government supporting the pipeline, the technology advances that have resulted in a decline in greenhouse gas emissions per barrel of oil sands by 30 percent since 1990, the thousands of jobs that will be lost, and the less safe and more expensive movement by rail and truck that will be used to bring the Canadian oil into the United States instead. To make the $8 billion project more palatable for the Biden administration, Keystone XL’s owner TC Energy announced an array of initiatives to accompany the pipeline’s construction.
The company vowed to hire a union workforce reaching a deal with four labor unions in August to build the line; promised to acquire renewable power for the entire network totaling $1.7 billion on solar, wind, and battery power by 2030; and, in the meantime, buy credits that fund emissions-reduction projects to offset its emissions. In November, it reached an agreement with five indigenous tribes where the tribes will take a $785 million ownership stake. Canadian Prime Minister Justin Trudeau cited the pipeline as one of his top priorities in his first post-election call with Biden.
When and if completed, the 1,200 mile Keystone XL pipeline will carry 830,000 barrels per day of oil from Alberta and North Dakota to Nebraska and then meet up with the completed portion of the pipeline that carries oil to the Gulf. The Keystone XL pipeline was proposed 12 years ago, and has undergone protests, presidential permit denials, and various court rulings. The cross-border portion of the line is already constructed and in place and is the premise under which the pipeline requires presidential authorization.
Arguments against Canceling the Pipeline
The Keystone XL project is under construction and employing more than 1,500 workers. The project is projected to provide approximately 11,000 high-paying jobs by 2021. Most of these jobs are unionized workers, many of whom belong to America’s leading labor unions. During next year, these workers would have earned approximately $800 million in wages.
The contribution of the pipeline to global warming is infinitesimal. The total greenhouse gas emissions from transporting 830,000 barrels per day of Canadian oil by pipeline would be about 150 million metric tons per year, or about 0.3 percent of the world total. Applying the EPA climate model using the least favorable set of assumptions results in a global temperature effect of about four ten-thousandths of a degree Celsius by 2100. The argument by environmentalists is that a lot of small effects would make a large effect on temperature change. But, that is not the case:
- Net-zero greenhouse gas emissions by the United States results in a change of 0.17° Celsius.
- The entire Paris agreement also results in a change of 0.17° Celsius, as some countries are allowed to continue emitting.
- Net-zero greenhouse gas emissions by the entire OECD results in 0.35° Celsius.
- A 25 percent greenhouse gas emissions reduction by the entire world results in about 0.5° Celsius.
Pipelines are everywhere in the United States. America is crisscrossed with over 2.6 million miles of pipeline. That’s enough to get to the moon and back more than five times. Transport of oil by pipeline is substantially safer than transport by rail or truck—the alternatives to Keystone XL. Pipelines carry about 70 percent of the ton-miles of crude oil and petroleum products in the United States, while water transport, trucking, and railroads carry 23 percent, four percent, and three percent, respectively. The data on adverse incidents—explosions or fires, spills of five gallons or more, fatalities, personal injuries requiring hospitalization, or all-inclusive property damage exceeding $50,000–show that pipeline incidents per ton-mile are about a quarter of those for rail transport, and about three percent of those for truck transport. According to the Federal Motor Carrier Safety Administration, in 2018, the most recent year for recorded data, large trucks were involved in 4,862 fatal crashes, 112,000 crashes that resulted in injury, and 414,000 crashes that resulted in property damage.
Without Keystone XL, the heavy Canadian oil will still be produced, but transported by rail or truck, to be refined in northern or eastern U.S. refineries. Lighter oil from U.S. hydraulic fracturing operations will be sent to the Gulf Coast refineries despite the fact that those facilities are optimized for heavier crudes. So, the net effect of stopping Keystone XL will be an inefficient allocation of crude oil geographically. Without the pipeline, railroad capacity will grow, overall safety will decline, emissions will be higher and economic costs will be higher since rail and truck shipments are more expensive than pipeline shipments. Pipelines are simply safer for humans and the environment than alternative forms of transport.
Other countries will capitalize on Canada’s heavy oil since it will still be produced and shipped through non-U.S. ports and pipeline projects. Two other export pipeline projects, the Canadian government-owned Trans Mountain Expansion and Enbridge Inc. Line 3 replacement, are proceeding, which will benefit China and make the United States reliant on OPEC again for oil supplies that the United States could have obtained from neighboring Canada.
Keystone XL construction will also induce significant spending and revenue at the local level, with hundreds of millions of dollars going to small businesses and major tax revenue increases for local schools and public safety. Rural areas in the country will be able to invest in new schools, new roads, and other public works projects that will bring about a higher standard of living. The project will also bring new opportunities for direct Indigenous employment and subcontracting in pipeline construction.
Canadian Reaction
Last year, the Canadian government invested just over $1.0 billion ($783 million U.S.) and offered loan guarantees to keep the project going. Because of Biden’s executive order canceling the project’s permit, Alberta has retained legal counsel and believed there is a “very solid” legal basis to seek damages under international free trade agreements if the pipeline is effectively killed by presidential fiat. Cancellation is eliminating jobs, weakening U.S.-Canada relations and undermining American national security by making the United States more dependent on OPEC oil imports.
Conclusion
President Joseph Biden has implemented a campaign pledge and canceled the Keystone XL pipeline international permit, despite the completion of the pipeline at the border crossing. The pipeline construction company has taken considerable steps to make the pipeline operation carbon-free, including promising to use renewable energy for its operation and buying credits until that occurs. There are far more reasons to allow the pipeline to be completed than there are for its cancellation, but Biden made the determination on his first day in office to unilaterally withdraw the permit without discussing the situation with the Canadian Government, our largest trading partner and close ally.
