Media figures are touting the Keystone XL pipeline as an “environmentally safe” alternative to truck and rail transportation, uncritically citing a State Department report on the environmental impact of building Keystone XL. But experts and subsequent studies have determined that the report is based on faulty conclusions and grossly underestimates greenhouse gas emissions caused by Keystone.
State Dept. Reports Keystone XL Will Not Have “Significant” Effect On Greenhouse Gas Emissions
State Dept. Examined Environmental Effect Of Keystone XL Pipeline That Would Transport Greenhouse Gas-Intensive Tar Sands Oil. The U.S. State Department released a report on the environmental impact of the pipeline in January, finding that, on a lifecycle basis, the crude oil that would be transported by Keystone XL emits approximately 17 percent more greenhouse gases (GHG) -- which are responsible for driving manmade climate change -- than the crude oil currently refined in the U.S. From the report:
WCSB [Western Canadian Sedimentary Basin] crudes are generally more GHG intensive than other heavy crudes they would replace or displace in U.S. refineries, and emit an estimated 17 percent more GHGs on a lifecycle basis than the average barrel of crude oil refined in the United States in 2005. [U.S. Department of State, January 2014]
State Dept.: Keystone XL Will Not Have “Significant” Effect On Greenhouse Gas Emissions Because Rail Would Replace It. The Washington Post's Wonkblog explained that despite finding higher greenhouse gas emissions would result from the pipeline's tar sands oil, the State Department concluded that those Alberta tar sands would still be transported via rail without the pipeline, resulting in an equivalent extraction rate with or without the pipeline. Thus, according to the State Department, Keystone would not significantly impact climate change. From The Washington Post:
Bottom line: The report concludes that blocking or approving the northern leg of the Keystone XL pipeline would not have a “significant” impact on overall greenhouse-gas emissions and future tar-sands expansion. That's because, it argues, most of Alberta's oil will likely find a way to get to the market anyway -- if not by pipeline, then by rail. [The Washington Post, Wonkblog, 1/31/14]
State Department's Conclusions On Keystone's Environmental Impact Are Flawed
But State Dept.'s Theory That Rail Transportation Would Replace Pipeline Has Failed To Materialize. A March Reuters analysis found that despite the State Department's projection that rail transportation of tar sands oil would replace Keystone and result in an equivalent rate of greenhouse gas emissions, "[f]ar less Canadian oil sands crude reached the Gulf Coast by rail last year than the U.S. State Department had been expecting":
In January, the State Department concluded that practically nothing would hamper development of the Canadian oil sands since energy companies could easily move the fuel by rail if TransCanada Corp's pipeline was rejected.
In March 2013, a U.S. State Department report cited industry projections that about 200,000 barrels per day (bpd) of oil from the Western Canadian Sedimentary Basis (WCSB) would be arriving at the Gulf Coast by rail before the end of 2013.
But even in December, when deliveries were near their highest for the year, that tally did not top 40,000 bpd, according to a Reuters analysis of data released by the Energy Information Administration last week.
The data, which details individual deliveries, indicates that monthly oil arrivals by rail were often below 30,000 bpd early last year and then rose unevenly. [Reuters, 3/5/14]
And State Department's Conclusion Rested On Flawed Assumption That Oil Prices Wouldn't Fall. As InsideClimateNews explained, the State Department report relied on the assumption that oil prices would not drop low enough to make rail transportation economically unfeasible. But oil prices have recently dropped to under $80 per barrel -- and are expected to drop even further to $75 or less in coming months -- which, according to the report itself, could cause a “significant increase in emissions of greenhouse gases.” InsideClimateNews reported:
Soaring production in the United States, slack international demand and increased fuel efficiency have produced a glut in the past few weeks that has left the benchmark WTI grade bouncing around $80 a barrel. Futures markets are pointing even lower and some analysts, most recently Goldman Sachs, are predicting a price of $75 or even less in the months ahead.
Just ten months ago, the State Department, brushing off the possibility of cheaper oil, found that the Keystone XL would have little impact on Canada's tar sands oil production--and by implication, little effect on greenhouse gas emissions. As long as oil prices stayed high enough, the reasoning went, the industry could afford to ship its output by rail to the Gulf Coast markets that the Keystone XL is intended to serve.
But the market analysis in that final environmental impact statement acknowledged that if oil prices went below $75 for a long time, the Keystone XL would indeed become a crucial factor for expanding the tar sands enterprise. And in that case, however unlikely, the report said the pipeline would enable a significant increase in emissions of greenhouse gases.
In the meantime, the price of oil has done exactly what the State Department's analysis said was highly unlikely--it has fallen by nearly 25 percent, and is now just at the point where the tar sands operators, among the highest-cost producers of oil in the world, are starting to feel the pinch. [InsideClimateNews, 10/28/14]
State Department Report Admitted That In Certain Scenarios, Keystone XL Could Have “Substantial Impact” On Climate. NPR reported that the State Department report itself acknowledged “significant uncertainty” about its findings, noting that under different scenarios “the additional greenhouse gas emissions projected from the project varied greatly”:
[T]his final version of the review also includes a caveat: Under certain economic conditions, the report says, the project could have a “substantial impact” on production of Canada's tar sands.
The department's previous, more preliminary assessments of the project concluded that it would cause no substantial impact on the environment. In contrast, this final version acknowledged that there was significant uncertainty -- and outlined various possible scenarios. Under each of these different scenarios, the additional greenhouse gas emissions projected from the project varied greatly. [NPR, 1/31/14]
Media Cite Flawed Report To Allege That Keystone XL Pipeline Would Be Environmentally Safe
MSNBC's Joe Scarborough: Scientists Say “Keystone Actually Will Deliver Oil To The Gulf Of Mexico In A More Environmentally Safe Way” Than Trucks Or Rail. On November 18, Morning Joe host Joe Scarborough asserted that support for Keystone XL “makes sense” given studies claiming the pipeline is more environmentally safe than trucks:
SCARBOROUGH: I believe in global warming. I believe in climate change. I believe that man has a very big contribution to that. I believe we have to slow down carbon emissions. So, but, if I look logically, and I have scientists telling me that Keystone actually will deliver oil to the Gulf of Mexico in a more environmentally safe way than driving around in trucks and in other -- I'm going to logically say, 'OK, well that makes sense.' [MSNBC, Morning Joe, 11/18/14]
MSNBC Economic Analyst Steve Rattner: Studies Show That Keystone XL Will “Help The Environment.” On the November 13 edition of MSNBC's Morning Joe, MSNBC's economic analyst Steve Rattner claimed that rather than harm the environment, “there are actually studies that show that Keystone would help the environment in the following sense -- that right now oil is being transported by trucks and by railroads, which consume more energy and are more environmentally dangerous than putting it into a pipeline.” [MSNBC, Morning Joe, 11/13/14]
Fox Correspondent: While “Some Critics” Say Tar Sands Oil Will Increase Greenhouse Gases, Republicans Cite Studies Finding Keystone Will Have “Minimal Impact On The Environment.” On the November 17 edition of America's Newsroom, Fox News correspondent Mike Emanuel stated that as Republicans who support building Keystone have noted, “there have been five environmental impact reviews of Keystone, all of which have come back and said it would have minimal impact on the environment.” He added, “Some critics on the left say that tar sands oil will dramatically increase the effect of carbon pollution and of greenhouse gases.” [Fox News, America's Newsroom, 11/17/14]
Fox Host Gretchen Carlson: Reviews Say Pipeline Would Have “Little Effect On Greenhouse Gas Emissions.” Fox News host Gretchen Carlson stated on the November 18 edition of The Real Story with Gretchen Carlson that “environmental review found the project would have little effect on greenhouse gas emissions.” [Fox News, The Real Story With Gretchen Carlson, 11/18/14]
CNBC Correspondent Touts State Department's Findings Uncritically. In a November 18 discussion on CNBC's Worldwide Exchange about the recent Senate vote on the Keystone XL pipeline, correspondent Nancy Hulgrave stated, “The State Department did say on two different occasions now they don't see a significant impact to the climate from the process of taking the tar sands through this pipeline.” [CNBC, Worldwide Exchange, 11/18/14]
Subsequent Studies Show Keystone XL Would Significantly Impact Environment
Stockholm Environment Institute Study: Keystone XL Would Emit Four Times More Carbon Emissions Than State's Estimates. In August, a Stockholm Environment Institute study published in the journal Nature Climate Change determined that the State Department's estimate on increased greenhouse gas emissions that would result from the pipeline's approval was approximately four times too low. The study's authors stated that the State Department failed to account for the fact that Keystone XL could drive down global prices and increase consumer demand for the crude oil:
We find that for every barrel of increased production, global oil consumption would increase 0.6 barrels owing to the incremental decrease in global oil prices. As a result, and depending on the extent to which the pipeline leads to greater oil sands production, the net annual impact of Keystone XL could range from virtually none to 110 million tons CO2 equivalent annually. This spread is four times wider than found by the US State Department (1-27 million tons CO2e), who did not account for global oil market effects [Nature Climate Change, 8/10/14]
Carbon Tracker Initiative: Keystone Would Generate Boon Of Greenhouse Gas Emissions, as Lower Oil Prices Make Rail Transportation Economically Unfeasible. Huffington Post explained that a March analysis by the Carbon Tracker Initiative, “a nonprofit that focuses on how carbon budgets interact with financial markets,” found that the State Department report underestimated the greenhouse gas emissions that would result from Keystone XL's approval because it did not account for the fact that lower oil prices would deter rail transportation:
Carbon Tracker says the government's analysis “does not fully explore” how the lower transportation costs of pipeline transportation, when compared to rail transportation, would affect future oil sands production. The price of oil would have to be higher to make shipping by rail cost effective. Given the difference in price points at which the various methods of shipping become cost effective, oil companies could produce much as 525,000 more barrels of oil per day out of the tar sands if they have access to the Keystone XL pipeline.
The pipeline would be responsible for generating a whole lot more emissions than the State Department accounted for, the group argues, because it would be facilitating more rapid development of the tar sands, which would create its own emissions in turn. The report finds that, through 2050, “KXL-enabled production” of tar sands oil would produce as much as 5.3 billion metric tons of carbon dioxide-equivalent. [Huffington Post, 3/3/14]
UC Berkeley Energy Analyst: Without Keystone, At Least 1 Billion Barrels Of Tar Sands Oil Would Remain In The Ground, Buying Time For Alternative Fuel Development. Economist Maximilian Auffhammer, who specializes in environmental and energy economics at UC Berkeley, projected that if the Keystone XL pipeline is not built, at least 1 billion barrels of tar sands oil would remain in the ground by 2030 -- even assuming the best case scenario where rail expands and other pipelines are built -- because the pipeline's approval would induce rapid growth in the oil sands industry:
[E]ven under the best-case scenario in terms of supply, where all other pipeline projects are approved and built, not permitting Keystone XL will likely leave 1 billion barrels in the ground by 2030. If other projects are not built, Keystone become marginal earlier and that number becomes even bigger.
As carbon is a stock pollutant as far as human time frames are concerned, not permitting Keystone “buys time” for alternative transportation fuels and climate policies to develop. This would allow all transportation fuels to compete on a level playing field, where carbon is taxed at its marginal external cost, which is a comprehensive policy solution. [Energy Institute at Haas, 3/24/14]