Opponents of the Keystone XL oil pipeline warn of its potentially catastrophic consequences. Building it, climate scientist James Hansen says, would mean “game over” for the climate.
Are they all just crying wolf and using Keystone XL as a proxy battle against oil?
I hope so, because the economics behind laying a pipeline from Alberta, Canada, to the US Gulf Coast would make it difficult for the pipeline to have any effect on greenhouse-gas emissions. I trust that if opponents dug a little deeper into the issues and the market for oil, they would agree — at least privately.
Keystone could actually reduce emissions. In the absence of this pipeline, Canada would need to not build an alternative one (and not use rail) to transport crude from the Alberta tar sands. Two western-route pipeline proposals exist: one would lead from the tar sands to southern British Columbia, the other would take a more northern route. A pipeline to eastern Canada has also been discussed.
Perhaps environmentalists believe that if they win the fight against Keystone, they would have the momentum to defeat all three Canadian alternatives as well.
But let’s calculate how much such a pipeline is worth to tar-sands producers, a major Canadian industry. Considering that just more than 1.6 million barrels of tar-sands crude is extracted each day, and that a pipeline would add roughly $20 a barrel to the price of that oil (without a pipeline, tar sands crude has to be sold at a discount ), a pipeline would bring producers $32 million dollars a day. That is a very large incentive to get pipes in the ground. Good luck stopping them.
Maybe the opponents of Keystone XL understand this and oppose the pipeline merely for symbolic reasons. Maybe the politics of climate change require hyperbole. My hope, however, is that policy will be driven by facts.
Bloomberg View