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3 Reasons Why Keystone XL Pipeline May Never Get Built

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Pipeline under construction in Alberta, Canada. Photo credit: Rblood / Flickr

By James Wilt

Almost a full decade since first applying for a presidential permit, TransCanada looks set to finally receive go-ahead in the U.S. for its massive $8-billion Keystone XL pipeline.

But here's the thing: U.S. approval, while a great leap forward for TransCanada, doesn't guarantee the Keystone XL pipeline will ever be built.

New U.S. President Trump was elected with the explicit promise to get the 830,000 barrel per day pipeline from Alberta to Nebraska built, under the conditions that the U.S. would receive a "big, big chunk of the profits or even ownership rights" and it would be built with American steel; his administration has already flip-flopped on the latter pledge.

On Jan. 24, Trump signed an executive order, inviting TransCanada to reapply for a presidential permit, which the company did two days later. It's now in the hands of the State Department, which has to issue a verdict by the end of March.

Sounds like a slam dunk, right? Not so fast. Here are three key reasons why.

1. Economics

Even Enbridge CEO Al Monaco recently stated that Canada only needs two more export pipelines.

"If you look at the supply profile and you look at our expansion replacement capacity for Line 3 and one other pipeline, that should suffice based on the current supply outlook, out to at least mid-next decade," Monaco said on a fourth quarter earnings call last week.

Wood Mackenzie analyst Mark Oberstoetter seconded that: "There's not an evident need to get three or four pipelines built."

Add to that the rapidly declining long-term prospects in the tar sands.

Those include Exxon's writing off of 3.5 billion barrels in bitumen reserves, ConocoPhillips' cutting of 1.2 billion barrels in reserves and Shell's forecasting of global peak oil demand in 2021.

Just last week, Shell sold off almost all of its tar sands assets to Canadian Natural Resources Limited. This follows divestitures by Statoil and Total SA in recent years.

"There will be no more greenfield projects if the price of oil stays at what it is," said David Hughes, expert on unconventional fuels and former scientist at the Geological Survey of Canada.

Hughes adds that Western Canadian Select already sells at a discount of around $15/barrel due to transportation and quality discounts.

Pipeline companies thrive on long-term contracts with producers, with lower rates for longer terms (such as 10 or 20 years).

Such contracts are huge financial gambles, especially given uncertainty about oil prices. In a low oil price scenario, tar sands take a hit because of the high cost of production.

"The economic case is not there for the three pipelines," said Amin Asadollahi, lead on climate change mitigation for North America at the International Institute for Sustainable Development. "And should the massive expansion happen, I don't think the financial benefits for the sector … would be there."

2. Landowners

We've already seen what lawsuits and protests can do to proposed oil pipelines, including crippling Enbridge's Northern Gateway and seriously delaying Energy Transfer Partner's Dakota Access Pipeline.

Same goes for Keystone XL. Lawsuits have plagued the company for years. In 2015, more than 100 Nebraska landowners sued TransCanada over the proposed use of eminent domain; the company eventually withdrew from the case and its plans for eminent domain, but it appears such conflicts will reignite with the federal approval. Landowners have already started to meet to plot out how to resist the pipeline.

TransCanada requires a permit from Nebraska in order to proceed. Last week, two-thirds of Nebraska's senators signed a letter petitioning the state's Public Service Commission to okay the proposed route; the original route was altered in April 2012 due to public opposition.

Keith Stewart, climate and energy campaigner at Greenpeace Canada, said: "They'll probably get the federal approval, but state-level and other legal challenges will go ahead to try to stop it."

Adam Scott of Oil Change International noted that he expects a lot of resistance to the Keystone project on the ground in Nebraska, especially given that the project still doesn't have a legal route through the state.

There's also growing resistance from Indigenous people, especially in the wake of Standing Rock. Thousands of Indigenous people recently gathered in Washington, DC for a four-day protest against the Dakota Access Pipeline.

In 2014, the Cowboy Indian Alliance united potentially affected farmers and Indigenous people to protest against the Keystone XL project. The recently signed continent-wide Treaty Alliance Against Tar Sands Expansion specifically identified Keystone XL as a proposed pipeline to be stopped.

3. Environment and Climate

Then there's the fight north of the border over greenhouse gas emissions and climate obligations.

The Canadian government's approvals of Kinder Morgan's Trans Mountain and Enbridge's Line 3 added a bit more than one million barrels per day in potential capacity to the tar sands network.

Unless there are significant breakthroughs in technology to cut per-barrel emissions, those two pipelines alone will allow for tar sands production and associated greenhouse gases to hit Alberta's 100 megatonne (Mt) cap; Stewart said companies have been talking about the possibility of emissions-cutting technologies such as solvents since 2007, but they still haven't materialized in a commercial setting.

Unconventional fuels expert David Hughes has calculated that if the 100 Mt cap is reached and a single LNG export terminal is built, Canada will need to cut non-oil and gas emissions by 47 percent cut in order to meet the 2030 target, which will be impossible "barring an economic collapse."

Adding an additional 830,000 bpd of export potential via the Keystone XL—allowing for the kind of expansion hoped for by the National Energy Board and Canadian Association of Petroleum Producers—could result in the breaching of Alberta's emissions cap and the country's climate targets.

Stewart points to Chevron's recent submission to the Securities and Exchange Commission, which acknowledged the increasing likelihood of climate-related litigation as a related sign of looming danger for companies.

It's a rapidly growing trend. Climate-based litigations are grounding fossil fuel projects around the world. A lawsuit based on constitutional rights to a healthy environment filed on behalf of 21 children during the Obama administration threatens to bring a similar precedent to the U.S.

"We're actually looking at a variety of ways to put pressure—including possible legal challenges—on companies that are basing their business model on the failure of the Paris agreement," Stewart said. "If you're telling your investors, 'We'll make money because the world will not act on climate change' are you actually engaging politically to try to produce that outcome? Are you lobbying against climate policy?'"

Reposted with permission from our media associate DeSmog Canada.

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By Zak Smith

It is pretty amazing that in this moment when the COVID-19 outbreak has much of the country holed up in their homes binging Netflix, the most watched show in America over the last few weeks has been focused on wildlife trade — which scientists believe is the source of the COVID-19 pandemic. Make no mistake: Tiger King: Murder, Mayhem and Madness is about wildlife trade and other aspects of wildlife exploitation, just as surely as the appearance of Ebola, SARS, MERS, avian flu and probably COVID-19 in humans is a result of wildlife exploitation. As a conservationist, this is one of the things I've been thinking about while watching Tiger King. Here are five more:

1. We are in a biodiversity crisis.

A million plant and animal species are threatened with extinction, many within decades, including tigers. The leading drivers of species decline and the impending collapse of ecosystems are ocean and land use changes (like converting wildlands into other uses, usually agricultural) and the direct exploitation of species (like taking animals out of the wild for eating, "medicinal" purposes, or status motives). It is for these exact reasons that there are more tigers in cages in the United States than there are in the wild. Developers continue to destroy tiger habitat and, in the not-so-distant past, hunters shot and killed tigers for sport or for trade in tiger products (and some still do illegally).

2. We must fundamentally change our relationship to nature.

Transformative change is necessary to limit species extinctions and secure human well-being (functioning ecosystems provide the clean air, clean water, carbon sequestration, flood control, healthy soils, pollination of plants and healthy coastal waters humans need to survive). Transformative change in this context means "a fundamental, system-wide reorganization across technological, economic, and social factors, including paradigms, goals, and values." We aren't going to halt the loss of species and strengthen ecosystems if we continue to treat wild plants and animals as expendable and renewable resources that we can use however we want. The tigers and other animals in Tiger King are exploited for profit and personal interests. Regardless of how they may be respected, coveted, or cared for, they are still treated as exploitable objects, which reinforces other destructive attitudes toward nature. A tiger cub is something to be held and photographed, a wetland is something to be filled and built upon, a rhino is something to be killed so we can use its horn for fake medicine. It's a view of nature as being in service to human wants, an attitude that is destroying our planet and one that must change.

3. Most wildlife trade should be banned and we should protect more wild places.

As noted above, ocean and land use changes and direct exploitation of species are causing an extinction crisis and threaten the ecosystems we depend on for human well-being. In line with our exploitative mindset, we've been stuck for centuries with economic and social patterns that allow unfettered use of wild places and wildlife until there's a problem. We need to flip that model on its head and only use wild places and wildlife if we can affirmatively demonstrate that such use won't contribute to the biodiversity and climate crisis. Tigers and the other animals appearing in Tiger King wouldn't be endangered today and wouldn't require "sanctuaries" if we hadn't destroyed their habitat and taken them from the wild for food, pets, "medicine" and trophies.

To set things right, we should ban most wildlife trade and protect more of the natural world. I say "most" wildlife trade to account for the exception of well-managed fisheries. NRDC has long sought to limit irresponsible wildlife trade (fighting for imperiled species internationally, supporting state efforts to limit trade, providing recommendations to China on revisions to its wildlife law), and now we must go further by banning most trade. In addition, we should support efforts to set aside vast swaths of ocean, land and terrestrial water to rebalance the functioning of our natural world. That's why NRDC and others support an initial call of protecting 30 percent of the world's oceans, lands and water areas by 2030. In China, we're protecting areas in a way that helps tigers by supporting the government's development of a National Park system, with targeted efforts on one of its pilot parks, the Northeast Tiger and Leopard National Park, which provides an important habitat for China's struggling populations of Amur tigers and leopards.

4. Not​ all sanctuaries are sanctuaries.

A lot of so-called sanctuaries are dumpster fires; they serve no purpose other than exploitation of animals for profit, and the animals suffer needlessly. It doesn't look like the Greater Wynnewood Exotic Animal Park — the park formerly owned by Joe Exotic — is a sanctuary, though it styles itself as being one, so the public may be confused. According to the International Fund for Animal Welfare, legitimate sanctuaries "do not breed, allow public contact with, sell, or otherwise exploit the animals that they take in." Legitimate sanctuaries can play an important role in saving imperiled species, promoting animal welfare, and educating the public. But those that do not meet strict standards are part of the problem, not the solution. The Global Federation of Animal Sanctuaries (GFAS) provides accreditation for sanctuaries that abide by a set of policies, including the maintenance of a nonprofit/noncommercial status. Big Cat Rescue, which is featured in the Tiger King series, "has held GFAS Accreditation status since 2009."

5. Changing our relationship to nature must include a just transition.

Throughout the world and in the United States, millions of people use nature in destructive ways for their livelihoods. I don't say this with judgement; often, people are just doing what we've always done — business as usual — which is unfortunately destroying the planet. Workers in the fossil fuel industry, fishermen in unsustainable fisheries, clearcutters in the tropics and boreal forests, and even people working at fake sanctuaries depend on the current system of exploiting nature to provide for themselves and their families. Unfortunately, it's at the expense of other people who depend on healthy, thriving ecosystems for their livelihoods and at the expense of human well-being overall. If we want to succeed in charting a new path for our planet, we must commit to making people and communities whole. The rampant exploitation appearing on the screen in Tiger King isn't just of wildlife — it is also of many desperate people brutalized by a political and economic system providing few options. We're not going to successfully realign our relationship with nature if we don't provide the necessary support for people and communities to transition to more sustainable, ethical means of providing for themselves and their families.

So, watch Tiger King and see if for you, like me, it informs the horror of the current moment, then maybe think about building a different world when we come out of this — a vibrant, natural world filled with wildlife and wonder, where we orient ourselves around preserving nature, not exploiting it, and embark on a new human journey.

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