If President Obama was looking for an official reason to conclude that the Keystone XL pipeline was not in the national interest of the U.S., the Environmental Protection Agency just delivered it to him in the form of a letter.
The EPA told the State Department, which has handled the decision of whether or not to approve the pipeline because it would cross an international border with Canada, that the tar sands oil transported by the pipeline would pose a number of risks. These include: potential spills, a “significant increase in greenhouse gas emissions,” and due to global oil price volatility, an increased likelihood that much more tar sands oil would get burned if Keystone gets the green light.
Cynthia Giles, the EPA’s top enforcement official, wrote a fairly short and simple letter to the State Department’s Amos Hochstein and Judith Garber. She began by complimenting the Department’s efforts to evaluate the environmental impacts of the proposed pipeline in its “comprehensive” Final Supplemental Environmental Impact Statement (SEIS). The agency has the authority to review permit applications for pipelines like this under Section 309 of the Clean Air Act and the National Environmental Policy Act (NEPA), and the timing for their comments got pushed forward to this week following uncertainty due to a court case over the pipeline’s route in Nebraska. Giles also noted the improved oil spill prevention preparedness, though spills remain “a concern for citizens and businesses relying on groundwater resources crossed by the route.”
When the letter turned to the subject of climate change, however, the tone changed. Giles said that the pipeline would cause a significant increase in carbon emissions: 1.3 to 27.4 million metric tons of carbon dioxide equivalent per year, which is the same as the pollution from almost 6 million passenger vehicle or eight coal-fired power plants. And it is unlikely that TransCanada, the company trying to build the pipeline, can cut down that number.
“Until ongoing efforts to reduce greenhouse gas emissions associated with the production of oil sands are more successful and widespread, the Final SEIS makes clear that, compared to reference crudes, development of oil sands crude represents a significant increase in greenhouse gas emissions,” said the letter.
This is a critical statement, given that in 2013, President Obama said “our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution.”
“The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward,” Obama continued. “It’s relevant.”
The new Republican majority in Congress recently voted to force approval of the pipeline, despite President Obama’s promised veto.
The EPA finished with a reexamination of the market analysis used by the State Department early last year when it estimated that Canadian tar sands oil would make it to market via rail, which is more expensive than transporting it by pipeline, given the price of oil back then.
Given the recent variability in oil prices, it is important to revisit these conclusions. While the overall effect of the Project on oil sands production will be driven by long-term movements in the price of oil and not short term volatility, recent large declines in oil prices (oil was trading at below $50 per barrel last week) highlight the variability of oil prices. The Final SETS concluded that at sustained oil prices of $65 to $75 per barrel, the higher transportation costs of shipment by rail “could have a substantial impact on oil sands production levels – possibly in excess of the capacity of the proposed project.” In other words, the Final SEIS found that at sustained oil prices within this range, construction of the pipeline is projected to change the economics of oil sands development and result in increased oil sands production, and the accompanying greenhouse gas emissions, over what would otherwise occur.
Tar sands production is essentially at capacity right now with oil selling above at least $75 per barrel through existing pipeline and rail facilities. Drilling companies can’t extract more without a way to get it to refineries or to market, and rail is too expensive with oil selling for as little as it has been. Building Keystone is an extremely significant pathway tar sands producers are looking at to get to their increased production targets.
Bill McKibben told reporters on a call Tuesday afternoon that the “charade” surrounding the years-long debate over Keystone ended today when the EPA checked the State Department’s math, concluding that there is “no way” that building the Keystone XL pipeline would not have a significant effect on climate.
“The President has all the nails he needs to finally close the lid on this particular boondoggle,” he said, calling EPA’s letter a “damning report” given the President’s stated climate test.