Energy analysts say what was missing in the seven-year struggle over the Keystone XL pipeline was an accurate accounting of the project’s impact on the environment or the economy.
The fight over the Keystone XL pipeline had all the elements of a classic Washington scrap: protests, political ads and lobbyists on retainer.
What was sometimes missing in the seven-year struggle, energy analysts say, was an accurate accounting of the project’s impact on the environment or the economy, the twin issues that drove the debate.
Environmentalists said Keystone XL, which TransCanada Corp. first applied to build in 2008, raised the risks of climate change. But a U.S. environmental review found its contribution to global greenhouse-gas emissions would be small.
Republican claims that the project would generate tens of thousands of jobs were exaggerated as well — there would be a few thousand during construction and then just 50 positions to operate the line. A third issue, energy security, was diminished by rising domestic production in the U.S.
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“Keystone is a pretty big pipeline,” said Ian Goodman of the Goodman Group, an energy consulting firm in Berkeley, Calif. “But it’s gained an importance symbolically in terms of the battle between proponents and opponents above and beyond its size and scope.”
In pulling the plug on the $8 billion project, President Obama said the pipeline would not be a “silver bullet for the economy.”
“For years, the Keystone pipeline has occupied what I, frankly, consider an overinflated role in our political discourse,” he said. “It became a symbol too often used as a campaign cudgel by both parties rather than a serious policy matter.
“And all of this obscured the fact that this pipeline would neither be a silver bullet for the economy, as was promised by some, nor the express lane to climate disaster proclaimed by others.”
Obama was expected to reject the project before climate negotiations set to take place in Paris in December, Bloomberg Intelligence analysts Rob Barnett and Cheryl Wilson wrote in a note Thursday. Obama said Friday he would be attending the Paris negotiations.
The pipeline has been fraught with controversy because of the greenhouse gases associated with producing Canadian oil sands.
There were recent signs the company knew the pipeline’s fate. TransCanada asked U.S. Secretary of State John Kerry Monday to suspend the review while Nebraska regulators undertake their own assessment. The State Department rejected the request.
Mark Cooper, a spokesman for TransCanada, said in a recent interview that the pipeline remained important to producers in Alberta, even as development slows there due to the drop in oil prices.
“It is certainly still needed, some suggest more than ever,” Cooper said in a statement. “Our shippers are still 100 percent on board.”
Keystone XL would have carried as much as 830,000 barrels of oil a day to refineries in the Gulf Coast designed to handle the type of heavy crude Alberta produces. That’s not an insignificant amount — about 11 percent of the 7.3 million barrels a day the U.S. imported in 2014.
TransCanada, in its September 2008 application, said one advantage of building the pipeline would be the U.S. and Canada wouldn’t have to rely on imports. Executives had reason to expect a relatively easy road to approval: that March, the U.S. approved an original Keystone project to deliver oil sands crude to U.S. after just 23 months of review.
At the time domestic drilling had dipped to an average of 5 million barrels a day, its lowest point in more than 60 years. Rising gasoline prices turned oil supply into a top issue in the presidential campaign.
But now oil companies are pumping almost twice as much oil, reaching the highest level in more than 40 years and undercutting Keystone’s advantage for energy independence. Gasoline prices now average around $2.22 a gallon nationally, according to AAA’s website.
The economic argument has also diminished. Shortly after TransCanada applied to build Keystone XL, the economy tanked. A year after the company applied, the unemployment rate reached 10 percent.
Republicans like former House Speaker John Boehner, an Ohio Republican, claimed that Keystone would create tens of thousands of jobs, a figure that was always overstated.
The State Department analysis found about 1,950 people would be employed in each of two years of construction. It would take about 50 people to operate the line.
The report also said about 42,000 jobs would be supported by the project, including at suppliers, food-service providers or through the spent wages of construction workers. The U.S. added 271,000 jobs in October, the Department of Labor said Friday.
“It’s as if a Metro extension to Dulles became a national political issue,” Goodman, who helped write a 2011 study critical of job claims about Keystone, said, referring to a rail transit line and airport outside of Washington.
More than 50 lobbying firms registered to influence Congress and the administration over Keystone. Opponents and proponents spent about $16 million battling it out over the nation’s airwaves during the 2012 presidential race.
Jeff Navin, co-founder of Boundary Stone Partners, a Washington-based consultancy, said the stakes over Keystone XL for environmental groups grew after the defeat of climate legislation in Congress in 2010.
“Clearly, there wasn’t going to be substantive, meaningful legislation, and there was a need to organize around something,” Navin, a former acting chief of staff at the Energy Department, said in a phone interview.
It made a good target for several reasons. One, Obama alone had the authority to block it, allowing for a targeted lobbying campaign.
Keystone XL also supported a particularly dirty form of fossil fuel development, Navin said. Oil-sands production levels the Boreal forests in Canada and releases on average about 17 percent more greenhouse gases than conventional crude.
The pipeline itself, though not the larger oil sands, is a drop in the global carbon bucket.
The State Department, which is responsible for reviewing cross-border oil pipelines, found it would at most lead to the extra release of about 27.4 million metric tons of carbon pollution each year. That’s equivalent to about eight coal plants, but just 0.4 percent of the U.S.’s total.
The U.S. accounts for about 15 percent of global climate emissions, second only to China.
Keystone has “become more symbolic than substantive,” said Michael Webber, deputy director of the Energy Institute at the University of Texas in Austin. “The security and economic arguments have been undermined. The environmental arguments had been undermined as well. Now it’s mostly about proving the other guy wrong.”
Jamie Henn, a spokesman for 350.org, an environmental group that helped lead the fight against Keystone, said blocking it won’t solve climate change. But projects like it make the problem worse.
The goal is to block fossil-fuel projects long enough to create the “political space” for more sweeping carbon regulations and clean energy alternatives to advance, Henn said.
Environmentalists, who argue the State Department undercounted Keystone’s carbon impact, are also challenging pipelines that would offer other avenues to ports and global crude markets, including TransCanada’s Energy East and Enbridge Inc.’s Northern Gateway.
“No one is going home after Keystone XL,” Henn said.