At a time when U.S. unemployment remains high, TransCanada Keystone $7 billion Keystone XL pipeline is being pushed by supporters on claims that it will create much-needed jobs. But environmentalists oppose the project and it still hasn’t been approved by the U.S. Department of State.
The past two weeks have seen business and environmental risks around the world. Here is the map of emerging risks and article on the Keystone XL pipeline risk via Maplecroft:
On October 7 2011, hundreds of supporters and opponents testified at a public hearing held by the US Department of State over the Keystone XL pipeline. This follows the arrests in August and September of more than 1,250 opposition protestors outside the White House. The decision on the pipeline has emerged as a defining political moment for the Obama administration.
The Obama administration is faced with a difficult task as conflicting economic, environmental and political factors must all be taken into account in deciding whether the Keystone XL pipeline is in the national interest.
Set against an increasingly bleak economic outlook and unemployment hovering around 9%, the Keystone pipeline could – according to project proponents TransCanada – directly generate as many as 20,000 high-wage jobs and contribute more than $20bn to the US economy at no cost to the public purse. With their members set to benefit from such a massive infrastructure investment, influential trade unions such as the Teamsters are standing alongside the energy industry in their support for the pipeline.
Environmental impacts are a key area of debate, particularly following recent high profile oil spills and ongoing concerns over climate change. Groups such as the Nebraska Farmers Union and First Nations representatives feel that local impacts have been missed, while there is a growing environmental movement protesting the significant greenhouse gas (GHG) emissions that would result from the extraction and burning of the crude oil transported by the pipeline.
Finally, opportunities to strengthen energy security in the US have often been linked to environmentally beneficial renewable technologies such as wind, solar and biomass. However, Keystone has been billed as the solution to US dependence on imported oil. Hilary Clinton, indicating support for the pipeline, was widely quoted in mainstream press as stating, “we’re either going to be dependent on dirty oil from the Gulf or dirty oil from Canada […]”.
The national interest and US environmentalism
The striking feature of these debates is not the merits of individual positions but how polarised and political these positions have become. As there is no specific formula for determining what the national interest is, the outcome can be taken as a bellwether on the trajectory of US environmental regulation.
Concerns over the potential environmental impacts focus on local and global issues, raising a mixture of technical, procedural and ethical questions. Due to the trans-boundary nature of the pipeline the Environmental Impact Assessments (EIAs) for the project were led by the Department of State rather than the Environmental Protection Agency (EPA). The EIA controversially found that there would be ‘limited adverse environmental impacts’ from the pipeline. These were quickly challenged by the EPA who described the EIAs as ‘inadequate’. Concerns were also raised over the possible conflict of interest on the part of the company commissioned to carry out the EIA due to a financial interest in the outcome of the project. However, this has been rejected by the Department of State.
Additionally, several high profile oil accidents support calls to halt the pipeline due to the risk of spills. Examples include the Deepwater Horizon accident in the Gulf of Mexico in 2010, a spill into the Yellowstone River in 2011, and more than a dozen spills from another Keystone pipeline during its first 12 months in operation.
Opposition arguments based on the project’s climate change impacts are particularly credible. James E. Hansen, head of NASA’s Goddard Institute for Space Studies, determined that because of the pipeline so much GHGs would be released that it would be impossible to avoid disastrous impacts from climate change. This is partially due to the vast amount of oil locked in the sands and because GHG emissions from tar sands are approximately 82% higher than conventional oil. The EPA estimates that the extra GHG emissions from the project may range from 600 million to 1.15bn tons CO2-equivalent.
Environmental arguments against the pipeline are robust, defensible and supported by a number of interest groups. Their rejection would therefore constitute a serious blow to US environmentalism and strongly indicate a shift towards a more growth-oriented, business-friendly regulatory climate.
Despite the environmental arguments it seems likely that the Keystone XL pipeline will be approved. It has the strong support of the Canadian government and implicit backing of the US administration alongside powerful energy and union interests. With a Republican in the White House the outcome would almost be a foregone conclusion but with a sitting Democrat it is marginally less so. Three contextual factors associated with the principal arguments may tip the balance towards its approval.
First, Obama’s poll numbers are sinking and the weak economy is a major reason why. The next presidential election will take place in November 2012 and with jobs likely to be a key issue the pipeline’s contribution towards employment and state finances makes it particularly appealing. The dire state of the US and Western world economies only serves to strengthen the pipeline’s case.
Second, arguments for climate change carry little weight in the United States. Domestically the public is losing interest in the subject. According to a survey by the Pew Research Centre, only 35% of Americans see global warming “as a very serious problem”. Internationally, with little momentum behind developing a legally binding international agreement to replace the Kyoto Accord, there is minimal pressure on the US to take decisive leadership on the issue.
Third, there are long-standing fears within the US over its energy security, particularly its dependence on Middle Eastern and some Latin American producers. Additionally, there are concerns that if Canada’s oil is not transported to the US then it will be taken instead by China and used to support its own economy.
Keystone’s approval would re-affirm the importance of economic growth and energy security over the environment and climate change. This would also be consistent with several recent US policy decisions degrading protection of the environment. However, the rejection of the project would provide a shock to American and international environmental politics and could signal a strong shift towards more stringent environmental regulation.