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What Happens If the U.S. Blocks Keystone XL?

Even if the administration's strikes down the pipeline, however, it may not be enough to keep Canada's tar sands oil in the ground.

Update: The White House delayed a decision on the fate of the Keystone XL pipeline in order to study other options.

Two years ago, Secretary of State Hillary Clinton delegated responsibility for overseeing construction of the Keystone XL pipeline to a deputy. By this week, it had become a big enough issue that President Obama was forced to address it during a public appearance. On Wednesday, Congressional Democrats asked the State Department’s inspector general to investigate the department’s review of the pipeline for undue influence. That night, pipeline protesters made so much noise during the president’s appearance in Denver, that he stopped his speech to respond: “We’re looking at it right now, all right? No decision has been made. And I know your deep concern about it. So we will address it.”

The Keystone XL pipeline would wind 1,700 miles from Alberta, Canada to Oklahoma and Texas, delivering up to 830,000 barrels of crude oil each day. The oil, extracted from tar sands, releases more carbon than conventional oil— the tar sands industry has wiped out all other cuts in greenhouse gas emissions that Canada has managed to eke out. TransCanada, a energy transmission company, applied to the State Department in 2008 for permission to build and operate the pipeline—If the government gives the company the required permits, construction work would start in 2013. In the past six months, environmentalists led by climate writer and activist Bill McKibben and organizations like the Rainforest Action Network have staged protests around the permitting decision, citing the risk of damage to environmentally sensitive areas along the pipeline route and the danger of releasing the carbon trapped in the tar sands into the atmosphere.

Even if the administration's strikes down the pipeline, however, it may not be enough to keep Canada's tar sands oil in the ground. There are alternatives to Keystone XL other than oil companies abandoning tar sands altogether, and economists warn that stopping the Keystone XL pipeline will not stop tar sands development. Stopping the pipeline will change the way the tar sands are transported, though.

Already, tar sands oil is being transported from Alberta’s oil fields by rail, a mode that carries its own spill risks. One possible alternative to Keystone XL is a pipeline that would move the oil to Canada's western coast, where it would be shipped off to Asia. But there are major questions about whether this particular project could go forward, since the route goes through land controlled by indigenous tribes, who have indicated they would oppose the pipeline. Canada does have limited options for transporting tar sands oil now. But as the Council on Foreign Relations’ Michael Levi points out, that’s meant, counterintuitively, that prices for Canadian oil are lower than they should be.

Stopping the Keystone XL pipeline could slow development of the tar sands. Tar sands oil is more expensive to extract than traditional oil, and companies are only working on it now because the cost of oil is high enough to justify it. But since tar sands oil carries a carbon premium, any system that puts a price on carbon—cap-and-trade, for example—could make it less economically viable. A delay in tar sands development could mean that more of the oil stays in the ground if dirty energy becomes more expensive in the interim.

Many environmentalists see this issue as a litmus test: the administration has abandoned climate change legislation, increased oil drilling, and failed to support the Environmental Protection Agency—if the president cannot stand with the environmental community against the pipeline, some say, why should they stand with him at all? Even if the administration does approve the project, though, many in the environmental community believe they have already made the protest worthwhile by raising the stakes on the issue.

Stopping pipeline won’t necessarily stop oil from burning: demand is just too high. The president is likely to decided that the best choice is to accede to the world’s oil addiction and approve the pipeline. But if he does, that shouldn’t be a cost-free choice: He should have to tell the nation what he’s doing to help get the economy off oil and how he’s going to make up for the extra carbon tar sands oil will release. The alternatives to building Keystone XL might not be all that different from building it in terms of carbon emissions. But accepting it without discussion isn't a good choice either. And since there is another way to do business in the long term, a discussion about how we’re going to get there is one worth having.

Photo via (cc) Flickr user daveeza

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