Keystone is Still in Limbo, and that’s Good for Canada

U.S. President Obama is again signaling he’s in no rush to approve the Keystone XL pipeline and that offers a sliver of hope for Canadians hoping to put the brakes on the pell-mell development of the Alberta oilsands.

Ahead of Super Bowl weekend the U.S. State department released the final environmental assessment of the pipeline project and mainstream media was quick to declare the report gave Obama the cover he needed to finally approve it.

Kate Shepherd at the Huffington Post wrote that the assessment "increases the likelihood" the pipeline, a great superhighway to deliver Alberta bitumen to thirsty U.S. Gulf coast refineries, would finally get the green light.

The report, in fact, stated, “approval or denial of any one crude oil transport project, including the proposed project, remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the United States."

That statement is so easily refutable. Indeed, there is much in this massive report that is, at best, suspect.  Look at this line on the potential damage from a large oil spill: "The potential impacts from a large spill would be similar to the impacts from the medium-sized spill, but on a much larger scale." You know: a big snowstorm is like a small snowstorm, except there is more snow. Wow, thanks for the insight.

It’s this kind of filler that should give policy makers in Washington pause, including on the main point that Keystone won’t increase the rate of extraction of oilsands bitumen.

In its foggy style, the report asserts that if Keystone was not approved, oilsands companies could turn to rail to get the product out the door or would simply build a pipeline across the Rockies and ship the bitumen to China.

This is a crucial point because Obama said he would have neither truck nor trade with a pipeline that adds to the world’s greenhouse gas emissions.

But we know Keystone really is a great “enabler” of the oilsands. Without pipelines oil executives are quite clear in saying that billions of dollars of projects would be stranded for decades. We know from a Reuters report that rail poses severe limitations in the shipment of bitumen to those Gulf Coast refineries.  

And the Northern Gateway pipeline that aims to ship the gunk to China is hardly a sure thing. There will be major battles over that line from First Nations and it won’t even go beyond the drawing board if the Harper government is voted out of office next year, as polls seem to indicate now.

So this brings us back to what Obama will do. Obama’s top aid, Denis McDonough, was on the Sunday talk shows last week to say that everyone should hold off on firing up those welding torches because that report was only "one of many important inputs into the process."

"What the president's role is now is to protect this process from politics, let the experts, the expert agencies and the cabinet secretaries make their assessments both of the study that was put in on Friday as well as its impact on the national interest," McDonough said.

One of the expert agencies will be the Environmental Protection Agency and it sharply criticized the previous environmental assessment from this consulting firm, which is facing conflict-of-interest allegations. It is hard to see how they will be any more enamoured with this ‘final’ version.

After all the twists and turns of this project, it’s nearly impossible to decipher what Obama will do now. You could make a reasonable guess he might go for a quick approval over the next few months to help a couple of Democrats in the Senate under pressure in the November elections.

Or perhaps Obama, with an eye on his climate change legacy, may wait until after November to make a considered decision. Free of the ballot box as a second-term president, he could even take the bold move of rejecting it.

And now back to Canada. Oilsands development has already disturbed 715 square miles of boreal forest – or more than the area of Toronto. A doubling of production has been approved – but can only come to pass with new access to markets.

The development has contributed to the rise of the Canadian dollar in the past decade, thereby helping gut the country’s once thriving manufacturing base. We are using vast amounts of natural gas and water to develop the resource, while producing huge lakes of toxic waste that could leave taxpayers on the hook for clean-up costs. Now a University of Toronto study is saying the air pollution from the oilsands is worse than feared.

Calgary Herald political columnist Don Braid recently called for “a pause on approval of new projects until the province can catch up with problems stemming from development and rising emissions.” It’s true — there’s no hope for Canada’s oilsands producers to rein in their environmental impact while proceeding full steam ahead. And for that reason alone, a delay on Keystone XL would be a good thing for Canada.

Image Credit: tarsandsaction via Flickr