More Keystone....

On Friday, the U.S. Department of State issued it's long-awaited Environmental Impact Statement (EIS) on the proposed Keystone XL pipeline. The EIS basically concluded that the Keystone XL pipeline would have little discernible impact on greenhouse gas emissions. Predictably, proponents of the pipeline hailed the EIS findings as yet more proof that Keystone is in everyone's interests and that the project should move rapidly toward final approval. Opponents of the project pointed to the fact that the EIS merely triggers the next phase of a process that includes a comment period wherein interested federal agencies, including the Environmental Protection Agency (EPA), can weigh in.

EPA is important for several reasons. Firstly, it has been reported the EPA is not on side with the findings of the EIS and may challenge some of the assumptions made by State. Secondly, the EPA is poised to become an extremely powerful entity in the Obama Administration's climate change mitigation efforts in the remainder of his second term. The US Supreme Court (Massachusetts v. EPA, 2007) has already ruled that the EPA is obligated to regulate the emission of greenhouse gases under the Clean Air Act (1963). Anyone that thinks EPA isn't going to get the green light to do so wasn't watching the President's State of the Union Address. Moreover, President Obama made it very clear that he was prepared to spend the remainder of his second term in pursuit of his agenda with or without the help of Congress. In other words, there will be plenty of executive authority exercised in the next couple of years, some of it undoubtedly controversial. Based on his SOTU (linked here) address touting the virtues of renewables, efficiency, and natural gas as a bridge fuel to those things, I expect climate change to be one of the more contentious areas.


Consider where the decision-making on Keystone XL has been located? The lead in the inter-agency process looking at approving Keystone XL has been the Department of State, now headed by John Kerry, a long time proponent of robust measures to deal with climate change. For Kerry, a climate change initiative may yet be one of his lasting legacies as a public servant. All of his years in the U.S. Senate failed to produce a key piece of legislation upon which he could hang his legacy. Many of his Senate colleagues had signatures pieces of legislation and issues to which they were strongly tied. John McCain had immigration and campaign finance. Ted Kennedy pushed healthcare reform. Chris Dodd, financial regulation. Kerry had pushed for a U.S. climate change pact, and had worked across the aisle with the likes of Lindsay Graham on major legislation until the financial crisis and the rise of the Tea Party scuttled it. In short, regardless of what the EIS has to say, Keystone XL has caught fire as a symbol of America's progress, or lack thereof, on climate change issues. Secretary Kerry's views on all of this are not inconsequential. These are not my insights. In 2010 Ryan Lizza wrote an excellent piece (linked here) on this in the New Yorker. Moreover, he's working with a President and an EPA that would like to see the U.S. exercise more global leadership on climate change (again, see SOTU).

Yet another dimension to all of this that repeatedly strikes me is how Canada (provincial and federal officials, as well as the private sector) has badly overplayed its hand by emphasising national security as a reason to approve Keystone XL. The energy picture in the United States has changed in ways that were unimaginable just a few years ago. Aided in part by a technological innovations like fracking and directional drilling, the United States now produces more oil and natural gas than at any point in the last 15yrs and is poised to soon become a net energy exporter. Moreover, the United States has been quietly reducing its greenhouse gas emissions (see EPA report) in recent years, in part due to the expanded use of natural gas and new fuel efficiency standards on automobiles. Canada? Not so much (See Environment Canada 2013 Emissions Trends Report).

Most commentators have argued that the delays in approving Keystone XL are all about politics and the fact that tremendous pressure is being exerted on the President by his supporters in the environmental community. The pressure is real. But to conclude that the delays are all about pandering to Obama's political left is an overly simplistic reading of the situation.

In short, what are the political incentives for the President to approve Keystone XL any time soon? Given the current energy and climate change picture in America, why would he move quickly to approve it? Where is his political win-set for approving Keystone, particularly in a critical mid-term election year? While Canadians scoff at the delays, utter veiled (and pointless) threats to sell more oil to China, and ridicule the American political system (see earlier blog post), Obama can take his sweet time. At this stage, Obama would be doing Canada a favor by approving Keystone XL with little payoff for him beyond a few short-term construction jobs.

I think Keystone XL will eventually be approved, but not any time soon.

If Prime Minister Harper or Premier Redford sought my advice, it would be this:


First, stop the shallow critiques of the American political system or the veiled threats about sending Canadian oil to China. None of it is helpful.

Second, give President Obama a REAL reason to approve Keystone. Signal to the President that you are prepared to get serious about climate change as we head into the 2015 UN Climate Change talks (Paris, December 2015) aimed at reaching post-2020 emissions reduction targets. Without explicit linkage to Keystone XL approval (ie. a quid pro quo), signal to the Obama administration a willingness to jointly work toward some kind of unified position heading into Paris. Here's another idea for another blog post-- propose that Mexico be brought to the table and enter 2015 with a joint North American set of proposals.

Canada and the United States can hardly afford to be out of step with each other on climate change issues given the potential impact on economic activity.  A robust, joint position on multilateral climate change talks would give the president political space to quietly approve Keystone XL (basically just a piece of infrastructure), and assist him with a presidential legacy and political agenda at home that took some serious hits in 2013 (healthcare, immigration reform, etc).