Climate Change

No on Keystone Is a Warning for Canada

There's a price to pay for failing to fight climate change.

Come on, Canada. Try harder.

Photographer: Mark Wilson/Getty Images

President Barack Obama's decision to kill the Keystone XL pipeline ends an unpleasant episode of political grandstanding that's lasted almost since TransCanada applied to build it in 2008. The pipeline's demise may also serve a useful purpose: reminding Canada that failing to do enough to fight climate change has a cost.        

QuickTake Oil Sands and the Environment

The hubbub over Keystone years ago exceeded the pipeline's actual environmental importance. Yes, it would carry crude from Alberta's tar sands -- produced from bitumen in a process that generates more greenhouse gases than conventional oil production does. But much of that oil is already arriving in the U.S. by train, at the risk of derailment.    

Nor was the pipeline as important to the U.S. economy as its proponents argued. Its estimated 10,000 construction jobs would have disappeared in two years; permanent jobs to run the pipeline would have numbered in the dozens. And thanks to the shale revolution (which has helped push down the price of gasoline to near $2 a gallon), there's no urgency to increase the flow of oil from Canada.

The pipeline would have been valuable nevertheless. The U.S. still needs to import oil, and there's a benefit to ensuring that a significant share of that comes from a friendly neighbor -- most safely by pipeline. But Canada's government under former Prime Minister Stephen Harper refused to smooth the path for Keystone by adopting a stronger policy on climate -- despite U.S. suggestions that it would help. Obama's announcement makes clear that if Canada still wants to be an "energy superpower," it will have to finally accept its responsibility to curb emissions.

Some Canadian provinces already understand this. The carbon tax that British Columbia imposed in 2008 has cut emissions without stalling the economy or growing government. Quebec began a cap-and-trade scheme in 2012, and Ontario is about to follow suit. Even the environment minister in Alberta, the center of Canada's oil industry, has acknowledged the province needs to do more.

Canada's new prime minister, Justin Trudeau, seems more amenable to addressing climate change than his predecessor. Trudeau has already promised to set a national target for reducing emissions. But he's also said he won't increase the commitments that Harper has made before next month's international climate talks in Paris, and they are the weakest in the G7.

In this time of low oil prices, Trudeau will face enormous pressure to go easy on Canada's oil industry. But Obama's no on Keystone should remind him that when Canada does too little to fight climate change, its oil industry suffers. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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