Shrill, Baby, Shrill

05.12.14

Keystone Pipeline Is D.C.’s Dumbest Debate

The Keystone XL pipeline won’t have a significant impact on the climate or American energy independence. So why is Washington still freaking out over it?

No issue better captures the dysfunction of Washington than the trumped up debate over the Keystone XL pipeline. Tuesday, the Obama administration released its 3rd National Climate Assessment, with one key message: Climate change is real, here, and only set to intensify. There are many important decisions to be made to tackle this critical challenge, but Keystone XL isn’t one of them. Building the pipeline won’t have a discernable impact on the climate; scrapping Keystone won’t make America measurably less energy independent.

A modest, bipartisan piece of energy legislation—the sort of half-measure that seems to be the hallmark of our dysfunctional Congress—has become the latest battleground in the fight over the Keystone XL pipeline. A new proposed amendment to that energy bill would override the administration’s long-delayed approval process.

Should this political gambit and the massive lobbying and advertising effort behind it succeed (and it’s far from clear that it will), President Obama’s hand will be forced. But true to form in this drawn out debate, what we are witnessing is a lot of politicking over what is fundamentally a non-issue.

From the start, the fight about Keystone XL has been symbolic. As captured by Ryan Lizza in his terrific September 2013 New Yorker article on the topic, Kate Gordon, a leader of the anti-Keystone movement explains, “The goal is as much about organizing young people around a thing. But you have to have a thing.” The environmental community, reeling from the failure of cap and trade, needed a fight around which to coalesce. Blocking approval of the Keystone XL pipeline, the “tipping point in the fight against climate change,” became the rallying cry.

But the numbers just don’t add up. In its most recent Environmental Impact Assessment, published in January, the State Department found (for the second time) that the pipeline would not have a meaningful impact on emissions (PDF). Anti-Keystone crusaders point to the relatively higher emissions profile of Canadian oil sands (5—15%, depending on your point of comparison), but even if you were to assume that blocking the pipeline would block the flow of crude into the market, the emissions impact would be about a quarter of 1 percent of the U.S. total.

And even that accounting wildly exaggerates the emissions impact of the pipeline, because the oil will flow to the Gulf Coast—with or without the completion of Keystone. As long as prices stay above $65-$75 per barrel (and it would be nearly impossible to imagine they fall below that without production from Canada) it makes economic sense to export to the U.S., even by more expensive and emission-intensive means. Rather than travel by Keystone XL, Canadian oil will reach refineries by less direct pipeline routes and less regulated rail or tanker truck.

Indeed, this is already happening. Crude-by-rail shipments jumped nearly 600% between 2011 and 2012, and nearly doubled again in 2013. Trade-offs come with consequences and the use of rail is no exception: we’ve seen the very real risks associated with crude-by-rail transport in not just relatively contained recent accidents outside towns in Virginia, North Dakota, and Alabama, but the loss of 47 lives when a train carrying crude derailed while passing through the town of Lac-Mégantic, Canada last year.

Nor would approval be a panacea. New production of oil in the U.S. and Canada is increasing global capacity and therefore the resiliency of the entire global system to shocks. But the Keystone XL pipeline won’t make the U.S. energy independent. Short of nationalizing our energy sector and resources, we’ll still buy our oil on global markets at the going price. And while it would certainly create several thousand much needed construction jobs, they would be short-lived.

Keystone XL should be approved not because it will save the U.S. economy, but because it is a large private investment in our country with de minimis negative impacts on the climate, and local safety and environmental issues which can and should be managed and regulated.

In five years of waiting for a still uncertain approval, Keystone has become a symbol of something else—politics winning out over real leadership and facing the tough decisions over our energy and climate future.

Over that same five-year period, the U.S. has awoken to its own vast energy resources, but still lacks a comprehensive energy policy. Take a look at the power sector—the combination of abundant, cheap natural gas, EPA coal plant regulations, and waning support for alternatives threatens to dramatically reduce the diversity of U.S. electricity production, pushing us ever more heavily into natural gas.

Growth in U.S. clean energy investment has been flat for five years. The Production Tax Credit for wind has expired, and should its renewal not pass in Congress, new investments are expected to be cut by up to two-thirds. All while our nuclear fleet ages and only one new plant is in the works from Southern Company. With coal plants on the way out, what you end up with is a power mix with an unprecedented dependence on one fuel.

That makes the health of the U.S. economy dependent on a reliable, long-term supply of low cost natural gas. But while our political leaders and lobbyists fight over Keystone XL, the more than $300 billion in new pipeline infrastructure spending needed to support the delivery of that gas is simply not being invested. In this Congress, there have now been 14 bills introduced related to Keystone and only one addressing the looming bottleneck in natural gas pipelines. None have moved forward.

Even less attention is given to what is widely acknowledged to be the critical factor in achieving our climate objectives—funding innovation. Today, about two-thirds of our total energy innovation spending goes to supporting the deployment of existing technologies. Spending on R&D has remained flat for the last several years and funds for demonstration projects of new energy technologies have all but disappeared. That’s not to say there isn’t a government role in deployment, but it’s an imbalance that needs to be addressed if we’re ever going to make strides in reducing our demand for oil and other fossil fuels. The technology choices we have today just won’t get us there. We need breakthroughs in energy storage to unleash the real potential of intermittent renewables like wind and solar, new plants and processes if biofuels are ever going to compete with oil (and not with our food supply)… the list can go on and on.

As even some the leaders of the anti-Keystone movement acknowledge, one project won’t make the difference on climate change. Instead, we need comprehensive policies, like a price on carbon. Since the implosion of cap-and-trade, a lot of good thinking on the left and right has gone into how to price carbon, including some very interesting work being done today at the conservative American Enterprise Institute. Funds could be returned to the economy through a reduction in the corporate tax rate, rebates to consumers, and funding innovation. Whatever happens with Keystone XL this week, issues like this one deserve to return to the center of our political debate.

The last time this tactic was tried, a 2012 effort to attach Keystone approval to a highway-funding bill, the While House promised a veto. One might hope that two years, and two environmental impact assessments later, the president will decide to put aside fears of disappointing his base and let the country move on to address the very real and pressing challenges we face.