Keystone XL is no done deal

Will simple economics (and perhaps enlightened leadership in Canada) kill the Keystone XL pipeline anyway?

Today's State Department endorsement of the controversial Keystone XL pipeline certainly boosts President Donald Trump's already-gaudy credentials as a world class climate change denier, but it's not clear that it will accomplish much of anything else. On paper, the TransCanada Corporation now has the Trump administration's blessings to add hundreds of miles of pipeline to allow hundreds of thousands of gallons of crude produced by the Alberta tar sands to flow daily into the U.S., a permission twice denied by President Barack Obama two years ago (by veto and by outright denial of its permit), but it's premature to assume the project will actually get built.

Why? A lot has changed in the energy world since the Keystone XL was first proposed nine years ago, and it may not justify an $8 billion investment. The international market for oil isn't what it once was. Prices have fallen, and that's a particularly big issue for oil extracted from tar sands which is more expensive (not to mention environmentally damaging) to produce. Not surprisingly, energy companies have been selling off their tar sands reserves — Royal Dutch Shell recently sold off most of its inventory for $8.5 billion. What looked like a great idea when oil was selling for $100 a barrel doesn't make as much sense when oil is $50 a barrel and less-desirable tar sands crude is going for a lowly $20 a barrel.

And the State Department permit is not the only snag. There are lawsuits by property owners in Nebraska which also must issue a permit and where concerns have been expressed about protecting underground water reserves. There are likely to be further protests mounted by Native Americans and environmentalists in South Dakota, Montana and Nebraska as there have been around the Dakota Access Pipeline. Ultimately, it may be competition from hydraulic fracturing or "fracking" that has reduced prices and inflated crude inventory that will deep-six Keystone XL and not the regulatory process so frequently derided by political conservatives.

And here's one more obstacle — Canada's own leadership. Prime Minister Justin Trudeau may have supported the project in the past, but he also must be mindful of his country's overall greenhouse gas emissions and meeting nationwide limits Canada promised in the Paris climate agreement. The Canadian government has already approved other pipeline projects that are essentially using up its cap space, including an expansion of the Kinder Morgan Trans Mountain Pipeline that runs to the country's west coast.

That raises the distinct possibility that by focusing on backward-looking energy polices (his promise to revive the U.S. coal industry providing the other glaring example), Mr. Trump isn't boosting jobs, he's costing the U.S. important economic opportunities. The more we encourage and accommodate needless greenhouse gas emissions by other nations, the quicker the bill for those decisions is coming due. If the Trump administration won't promote and invest in renewable energy, jobs in that sector will also go elsewhere — Mr. Trump's recently-proposed "skinny budget" would eliminate longstanding programs that invest in green energy, which has been among the nation's fastest growing job sectors.

So much of the Keystone XL project's merits have been overstated. While there may be thousands of construction jobs created on a temporary basis, a 2015 analysis concluded that Keystone will produce just 50 permanent jobs in the U.S. And at what cost? If Keystone merely enables TransCanada to sell its oil on the international market somewhat faster than before, the only tangible effect will be to compound the effects of climate change as the oil is consumed. And even if President Trump and others respond by doing no more than sticking their collective heads further in the sand, the costs associated with climate change from higher temperatures and sea level rise to stronger hurricanes and worsened droughts will dwarf any possible short term benefits of allowing oil and gas producers to run wild.

We support job-producing infrastructure investment but not at so high a price. This is short-sighted, self-destructive behavior on the part of president who won't listen to reason or scientific evidence. The only good news is that perhaps Mr. Trump's stamp of approval comes too late to rescue a project that makes even less sense today than it did in 2008.

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