President Biden is treating a European pipeline and a North American pipeline very differently—one is a natural gas pipeline from Russia to Germany, Nord Stream 2, the other is an oil pipeline from Canada to the United States, Keystone XL. Despite bipartisan support for tough sanctions on Russia against Nord Stream 2, President Biden has weakened those sanctions, which will surely see the pipeline’s completion. Germany strongly supports the pipeline despite the European Parliament calling in April for it to be stopped.
Germans, however, want the less expensive natural gas coming from a pipeline rather than the more expensive LNG. Countries like Poland are willing to pay a premium for LNG to avoid Russian gas, even if they are significantly less wealthy than Germany. While Nord Stream 2 will provide cheap energy, it will deepen European dependence on Russian gas, forcing buying countries to be beholden to Putin for gas that is currently piped via Ukraine. In the past, Russia has cut off natural gas supplies to Ukraine as retribution in disputes. Bypassing Ukraine with a direct pipeline to Germany helps Russia advance its goal of isolating its former client state, now a struggling democracy, from Western Europe. It also equates to enormous sums of revenue for the Russian state.
In contrast, Biden, as one of his first official acts, shut down the construction of the Keystone XL pipeline that would improve U.S. energy security by bringing heavy oil from Canada to the United States efficiently and cost effectively compared to the alternatives. Thus, Biden is treating a pipeline that increases Russian influence and revenues better than one that would enhance America’s energy security, jobs and revenues. Completion of Nord Stream 2 could also lessen European demand for U.S. LNG.
Biden’s Sanctions on Nord Stream 2
The Biden administration is sanctioning ships involved in the building of Nord Stream 2 instead of the company in charge of the project. Biden officials have supposedly determined that the only way to potentially stop the project — which is 95 percent complete — is to sanction the German end users of the gas. As such, the Biden administration will waive sanctions on the corporate entity (Nord Stream 2 AG) and its CEO (Putin friend and former East German intelligence officer Matthias Warnig) overseeing the construction of Russia’s Nord Stream 2 pipeline into Germany.
Biden’s Executive Order on Keystone XL
On his first day in office, Biden revoked the international permit on the Keystone XL pipeline that would allow heavy oil to move from Canada to the United States despite the cross-border portion of the pipeline being already constructed and in place, which is the premise under which the pipeline requires presidential authorization. If completed, the 1,200 mile Keystone XL pipeline would 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, but was approved by the Trump Administration and undergoing construction when Biden initiated his executive order.
President Biden canceled the Keystone XL pipeline permit despite the greenhouse gas emissions from the pipeline’s operation becoming carbon-free by 2023, the Canadian government supporting the pipeline, the technology advances resulting 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. The Keystone XL project was employing more than 1,500 workers when it was canceled by Biden and the project was 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.
Conclusion
President Biden has different views on American energy and that of its allies. In order to placate Germany, he has lessened the sanctions on Nord Stream 2, which will allow for its completion, bypassing the current pipeline in Ukraine. This will give clout and revenues to Russia, while lessening the demand for American LNG that Germany could purchase instead. Biden’s treatment of Nord Stream 2 is very different from his treatment of the Keystone XL, which he cancelled as soon as he took office providing less energy security for Americans. One just needs to look at the cyberattack of the Colonial pipeline to realize the need for a secure energy infrastructure. What appears at first to be a double standard in U.S. treatment of energy pipelines may in fact produce identical results—the weakening of U.S. energy dominance and the strengthening of our strategic competitors.
