Blog Posts | Pembina Institute

Thinking outside the pipeline: Why American decision-makers must consider the true costs of Keystone XL

Published Sept. 22, 2011 by Nathan Lemphers

Nathan Lemphers

The clock is ticking for the U.S. State Department to evaluate the proposed Keystone XL (KXL) pipeline. The federal agency is holding its final public hearings over the next few weeks to solicit one last round of comments before entering a 90-day decision period, during which it must determine if a pipeline from the oilsands to Texas is in the United States' best national interest.

While the State Department ideally wants everything wrapped up before the end of the year, it's a tight timeline for the Obama administration to make such an important decision. 

Although the State Department did just release its Final Environmental Impact Statement (FEIS) for KXL, it understated some of the most important considerations, including alternate routing, project alternatives and environmental justice, to name a few.

And two of the most significant issues left out of the State Department's final impact statement are far too fundamental to simply overlook —  upstream environmental impacts and climate change implications — and so we've pulled together briefing materials on these two key issues.

Upstream environmental impacts

The State Department is not required to consider the environmental impacts that occur in Canada from additional oilsands development required to fill the KXL pipeline. However, the agency notes in the FEIS that:

"[As] a matter of policy, and in response to concerns that the proposed Project would contribute to certain continental scale environmental impacts, [the U.S. State Department] has included a summary of information regarding environmental analyses and regulations related to the Canadian portion of the proposed Keystone XL Project in Canada..."

Unfortunately, the summary that follows in the FEIS (Section 3.14.4.3, page 3.14-61) reads more like promotional materials from the energy industry or Alberta government rather than a critical and sober analysis of oilsands environmental impacts and management.

The prestigious Royal Society of Canada (our version of the U.S. National Academy of Sciences) released a report on the oilsands last December that states:

"The current visibility of relevant provincial and federal agencies, in particular in dealing with the major environmental challenges [of Canada's oilsands] is low, and is generally not in line with those challenges."

The U.S. State Department apparently has a different understanding about Canada's ability to manage the oilsands.

syncrude tailings upgrader & sulphur stacksIn response to the FEIS, the Pembina Institute has just released a fact sheet and more in-depth briefing note that outline current environmental management practices in the oilsands. Our analysis clearly demonstrates that there are considerable shortcomings in the existing oilsands environmental management framework.

For instance, the recently released draft recovery strategy for woodland caribou allows for 95 per cent of caribou habitat in northeastern Alberta to be lost to oilsands development. Rather than preserve core habitat or moderate oilsands growth, the federal environment agency is advocating for the killing thousands of wolves to prevent caribou from going locally extinct.

Given these shortcomings, it is critical for U.S. decision-makers to think outside the pipe and reconsider the environmental impacts created in Canada from filling the proposed KXL pipeline.

Climate change implications

U.S. decision-makers should be particularly concerned with the greenhouse gas emissions associated with the proposed KXL pipeline. Unfortunately, the FEIS failed to adequately describe Canada's ability to manage greenhouse gas emissions from the oilsands. To provide additional context around what KXL-accelerated oilsands development means to greenhouse gas management in Canada, the Pembina Institute has produced a fact sheet and detailed briefing note.

Our analysis indicates the oilsands are clearly standing in the way of effective climate action in Canada.

"More than 99 per cent of all oilsands exported from Canada goes to the United States... one cannot overestimate the influence that decision making in D.C. has on decision making in Edmonton and Ottawa."

Existing climate policies at both the provincial and federal level are too weak to limit emission growth from oilsands. For instance, current carbon pricing in Alberta is too low to make carbon capture and storage economically viable in the absence of massive public subsidization and generous carbon offset revenue schemes. Federal Environment Minister Peter Kent had promised regulations for oilsands greenhouse gas emissions by the end of 2011, but has recently said that these regulations will be delayed. Moreover, a recent Pembina Institute analysis shows Canada will have to increase its greenhouse gas reduction efforts tenfold if it intends to curb the growth in oilsands emissions and reach its 2020 target.

Any oilsands emission intensity improvements are not guaranteed, and are virtually certain to be outweighed by the rapid increase in absolute emissions resulting from future oilsands expansion. 

Keystone XL would hasten oilsands expansion and therefore increase the rate of emissions growth. This is particularly problematic given the ineffective greenhouse gas management currently in Canada and the Obama's Administration's goal of a clean energy economy.

The U.S. is Canada's only oilsands customer

More than 99 per cent of all oilsands exported from Canada goes to the United States. As a result, the U.S. has considerable influence over the environmental management of the oilsands and the climate change implications of the oilsands it imports. Simply put, one cannot overestimate the influence that decision making in D.C. has on decision making in Edmonton and Ottawa.

The United States has the ability to exert significant pressure on Canadian governments to improve environmental performance in the oilsands. For example, the U.S. could send a clear signal that the high-level of greenhouse gas emissions that result from current oilsands development practices are unacceptable, either by not approving further oilsands pipelines or by implementing progressive climate legislation that puts high-carbon fuel sources at a disadvantage.

Thinking outside the pipeline

When considering if the proposed Keystone XL pipeline is in America's national interest, the U.S. State Department should adopt a more rigorous analysis than simply echoing the impact-minimizing descriptions provided by the Government of Alberta.

It's time for U.S. decision-makers to think outside the pipeline — to consider the broader environmental implications of approving Keystone XL and to address just how this pipeline fits into President Obama's vision of a clean energy economy.

Find more content by topic: Climate Change, Green Economics, Oilsands, Alberta, Carbon Pricing, Federal Action, International, Oil & Gas, Pipelines, USA.

Jeff Munroe — Sep 25, 2011 - 12:55 AM MT

We don't need the pipeline . . . Alberta needs the pipeline. To be more specific, the oil companies in Alberta need the pipeline. There is no net benefit to Canada from the oilsands, or the billions in subsidies and potential billions we'll be spending to have to clean up the mess that climate change brings from burning this garbage. The bulk of the jobs created will be American, the enviromental damage can't even be calculated adequately, and that's assuming that the system or pipeline doesn't ever spring a huge leak. The damage being done is primarily by creating and using this stuff in the first place . . . and the tab will be huge, especially when the 'unknowns' start to happen as we discover just how incredibly damaging this place is to as much Alberta as the world. One wonders who Alberta will ultimately be running for funding when the toxic substances created by the processes start to make a third of that province unlivable due to the fact that even the science can't even remotely make the promises of making the process of creating and using this stuff keep up with any regulations that would effectively satisfy any enviromental concerns.

Philippe — Sep 25, 2011 - 08:37 PM MT

The issue of approving the Keystone XL pipeline project goes beyond the specifics of the project. Transmission pipelines are nothing more than energy infrastructure that connects producing regions to consuming markets. In the case of Canada, our energy resources are a strategic asset in an increasingly more competitive global energy trade.
Canada is a trading nation and has always been going back to the Hudson Bay company. Trade enables the creation of wealth, allowing Canada to protect and build the necessary social infrastructure (school, hospitals etc) that we take for granted. Wealth also creates opportunities to research and adopt new technologies that can help us protect our environment. So the question is not Alberta needs a pipeline. The bigger question is should Canada uses its strategic assets or not?

Nathan Lemphers — Sep 26, 2011 - 10:02 PM MT

@Phillipe. I agree that our energy resources are a strategic asset and this includes the oilsands. However, the oilsands can also be a strategic liability for Canada IF it develops this resource irresponsibly. Right now, the pace and scale of oilsands development has overstepped Canada's ability to properly manage it. That is why there are 170km2 of tailings lakes, why oilsands greenhouse gas emissions are forecast to double in the next decade, why the caribou will likely go extinct in the next 30-40 years and why over 100 people were arrested today in Ottawa. I think this is a better question to ask: Is Canada strategic enough to develop these assets responsibly?

Harold — Sep 22, 2011 - 11:24 AM MT

Further to my last response, I say YES to Keystone XL with the above constraints but NO to Enbridge Northern Gateway for three reasons - excessive pollution and GHG at the tar sands when you factor in export to the US, threats to ecosystems and First Nations lands and watersheds across BC from potential oil spills, and supertankers moving in and out of Kitimat and treacherous maritime weather conditions that are the worst in Canada.as reported by the Royal Society of Canada 2010 Report and by the Commissioner of the Environment and Sustainable Development and Office of the Auditor General on the Canadian Coast Guard readiness to preventing oil spills, clean up, etc.

Harold — Sep 22, 2011 - 11:10 AM MT

Canadians and Americans must insist on what James Hansen said that the oil sands must be developed responsibly. Yes, we need to sell our oil to the US but they must insist on Canada's push for lower GHG emissions and lower environmnetal impact at the oil sands projects - to follow the guidelines established by the Royal Society of Canada in its December 2010 report. Both provincial and fgederal governmnets and the Obama administration must be transparent; legislation must follow side by side with Keystone XL construction. Yes, we need the pipeline but with environmnetal constraints and legislation from Canada and by the US insistence. It cannot be business as usual.

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