Keystone XL and the National Interest: Obama Is in Uncharted Territory

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InsideClimateNews.org — Whenever President Obama eventually decides on a permit for the Keystone XL pipeline, it will be safe to say this: A lot has changed since Washington's previous two big pipeline decisions.

As part of the research for Keystone and Beyond, a new InsideClimate News e-book on the history of the Keystone XL decision, I examined George W. Bush's 2008 granting of a permit for the first Keystone pipeline, the initial step in TransCanada's plans to link Canadian tar sands oil with American refineries. And I looked at Obama's 2009 granting of a permit for the Alberta Clipper, a similar cross-border pipeline built by Enbridge.

It's not easy to see either as a meaningful precedent for the Keystone XL verdict, even though all three pipelines are meant to expand energy supplies of Canadian crude into U.S. markets.

To read the decision papers on the first Keystone and on the Clipper is to step back in time. Expectations for oil supply and demand were dramatically different from today. So was the thinking about how to control the emissions of greenhouse gases that cause climate change. Describing changes like these is the main thrust of Keystone and Beyond.

All major pipelines that cross U.S. borders must obtain a presidential permit, which is granted only if there is a determination that the project is in the broad national interest.

In January, after the State Department completed its environmental analysis of the Keystone XL, the Obama administration started what was to be a 90-day interagency national interest determination process. But its review was put on hold in April to give Nebraska time to work out details of the Keystone XL's route through that state, after a judge nullified the approved path on constitutional grounds. Now pipeline backers in Congress are trying to force Obama's hand. If they don't have enough votes the decision will remain his—and probably won't come for several months.

As Keystone and Beyond concludes, Obama's decision will be based on different oil market realities and different climate change imperatives than past decisions on pipelines.

How Times Have Changed

The Keystone I Decision (2008)

These differences become clear when one reads the 24-page national interest determination for TransCanada's Keystone I pipeline, signed on Feb. 28, 2008 by Bush's undersecretary of state for energy, Reuben Jeffery III.

Back then it took less than two years from April 19, 2006, the day TransCanada applied for a permit, to the day the permit was approved. (The government is in its sixth year of the Keystone XL review.)

The question was viewed as a simple one. America needed the oil; Canada had it. There was no discussion of global warming or of carbon dioxide emissions in the document granting approval.

The most striking thing is how wrong the basic assumptions about the future of U.S. oil production and consumption during the Bush years proved to be.

"U.S. consumption of liquid fuels (crude oil and refined products) will total 26.9 million barrels per day in 2030, an increase of 6.2 million barrels per day over the 2005 consumption," the approval document said. "Most of this increased demand is expected to be met with crude oil imports."

At the time oil production in the United States was on the decline. And the Bush administration argued that imports from Canada would have to grow to meet increasing demand for oil—even if the U.S. put policies in place to curb oil consumption.

But if you look at these charts, published this month by the Energy Department, you will see that the forecast for rising consumption that underpinned the case for Keystone I came at precisely the moment that consumption stopped rising for the foreseeable future. Now forecasts predict a modest decline.

Meanwhile, U.S. supply of oil is set to increase.


The Alberta Clipper decision (2009)

While it was up to the Obama administration to make a final ruling on Enbridge's application to build its Alberta Clipper line, most of the work reviewing the project was done by the Bush administration. The application arrived at Bush's State Department in 2007, a year after the Keystone I application. It, too, took about two years to wend its way through the system.

By the time Obama's State Department team was in place, the approval papers for the project were all but completed, and the formal national interest determination was signed by Obama's deputy secretary of state, James Steinberg, on Aug. 3, 2009.

Gone were the dire, and errant, forecasts of oil supply and demand from the Bush decision on Keystone I. But Steinberg repeated the same reasoning: that an imbalance between U.S. oil demand and supply required growing Canadian imports and that more pipelines were needed to move the oil.

The need for secure oil supplies trumped any environmental concerns.

"The Alberta Clipper project would serve the national interest in a time of considerable political tension in other major oil producing regions and countries by providing additional access to a proximate stable secure supply of crude oil with minimum transportation requirements," Steinberg wrote.

The administration had considered the problem of greenhouse gases, he said, and "considers that on balance they do not outweigh the benefits to the national interests.

"The United States will continue to reduce reliance on oil through conservation and energy efficiency measures ... as well as through the pursuit of comprehensive climate legislation and a global agreement on climate change."

At that time, in mid-2009, the Obama administration had just achieved passage in the House of Representatives of an ambitious cap-and-trade bill to limit emissions of carbon dioxide. The legislation also would have imposed a border tariff on the carbon in oil imports, which would have made tar sands oil from Canada uncompetitive. The White House hoped to win passage in the Senate either in 2009 or 2010—something that never happened and that nobody expects any time soon.

The Obama team was also hoping that a United Nations negotiating session that December in Copenhagen would produce a meaningful treaty committing the whole world to deep reductions in carbon dioxide emissions. Instead, voluntary targets turned out to be the best the negotiators could come up with. It's still not clear whether urgent talks, now under way, will succeed in achieving an effective and binding global climate treaty in Paris in December 2015.

Public and Political Dissent: Then and Now

Another striking difference between the Keystone XL decision and the decisions at the end of the Bush and the beginning of the Obama administration is the extent of public and political interest.

This month, protests against the pipeline will continue, and the Senate will talk about whether to push it through.

Nothing like this kind of debate was happening when the Keystone I and the Alberta Clipper pipelines sped through the approvals process in 2008 and 2009.

When the State Department held 13 public meetings on its draft environmental impact statement on the Keystone I pipeline, 67 people showed up. In all, the department received 1,009 comments.

More than 900 comments came in on the Alberta Clipper draft environmental impact statement—and just four upon issuance of the final environmental review.

On Keystone XL, the comments have poured in by the millions. Surely the increase over the years in public attention is another reason that this decision has taken not just two years, but more than five, since the application was filed in September 2008, months before power passed from Bush to Obama.

Republished with the permission of InsideClimate News, a non-profit news organization that covers energy and climate change issues in law, policy and public opinion. The e-book Keystone and Beyond is available for free download for a limited time here.

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