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Key Analysis Seems to Go KXL's Way—Or Does It?

Originally published on Onearth.org here.

This post has been updated throughout with the latest analysis and reaction.

The U.S. State Department released its final environmental impact study of the proposed Keystone XL tar sands oil pipeline Friday, and although some scientists and advocates who have spent years making the case that it would be an environmental disaster don’t much like the results, other pipeline opponents have found it encouraging to their cause. That's because, for the first time, the department acknowledges in this analysis that the project could worsen climate change.

That matters because President Obama has said the climate consequences of the pipeline are his key criteria for deciding whether to approve the $5 billion project, which would ship Canadian tar sands oil across the American heartland to Gulf Coast refineries and overseas markets.

A State Department briefing and early news reports Friday initially seemed positive for the project's chances, reporting that the analysis concludes the pipeline's impact would be largely neutral. "Approval or denial of any one crude oil transport project," the report states in what many experts saw as its key takeaway, "... 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."

Yet State Department officials were quick to say that they've made no decision. So was the White House late Friday. Matt Lehrich, an Obama spokesman, pointed out that the environmental analysis "includes a range of estimates of the project's climate impacts, and that information will now need to be closely evaluated." He said the White House would wait for further input, including from the Environmental Protection Agency (which has shown more concern about the pipeline's potential climate impact than the State Department has in past reports).

Though it's not the final word, Friday's release does trigger what appears to be the endgame in the more than five-year battle over the wisdom of transporting tar sands oil across some of the continent's most fragile and important ecosystems. Federal agencies now have 90 days to weigh in, with a 30-day public comment period. Though the decision on issuing a permit is officially Secretary of State John Kerry's (because the pipeline would cross an international border), everyone expects the president to have the final say on such a high-profile political hot potato. 

Digging into Friday's analysis, environmental advocates (including NRDC, which publishes OnEarth) declared that it gives Obama all the ammunition he needs to turn down the project. They point to a scenario in the report that assumes lower future oil prices and little or no growth in other pipelines. In this scenario, Keystone XL would be a major driver of increased carbon pollution—the equivalent of putting up to 5.7 million new cars on the road or building close to eight new coal-fired power plants.

And the thing is, though the State Department downplays this scenario, it's actually the one that's most likely, according to predictions from the International Energy Agency and other analysts, including the energy futures markets and the World Bank. So although the State Department says it's possible that—without KXL—just as much tar sands oil would be extracted anyway and shipped by alternative means (rail or other pipelines), opponents are saying this goes against economic reality.

This isn’t the first State Department analysis of the pipeline, or the first to have contested findings. A 2011 report had to be scrapped after local opposition to the project in Nebraska forced TransCanada to draw up a new route (and let Obama put his decision off until after the 2012 election). Then a draft re-analysis issued last year was widely criticized as flawed—including by the EPA. There was also evidence that the State Department’s consultant had a financial conflict of interest, which is under investigation.

Friday's report acknowledges more serious concerns about transporting tar sands oil than the State Department has in the past, including dangers to wildlife, agriculture, and drinking water supplies. Pipelines have a poor safety record (witness recent spills that polluted communities and waterways in Michigan and Arkansas), and Keystone XL would cross six major rivers and the Ogallala Aquifer, which provides drinking water and irrigates agriculture in parts of eight states.

TransCanada forecast that its first crude oil pipeline, Keystone 1, would leak no more than an average of 1.4 times over a decade. Instead, it had 14 U.S. spills in a single year, and federal regulators had to temporarily shut it down. Since 1986, according to a ProPublica investigation, U.S. pipeline accidents have killed more than 500 people, injured over 4,000, and cost nearly $50 billion in property damages.

Ultimately, though, the pipeline’s fate is likely to come down to its impact on global climate change. President Obama has declared that he wouldn’t issue a permit for the pipeline if it would "significantly exacerbate the problem of carbon pollution." In a speech last June, he said: "The pipeline's effect on climate will be absolutely critical to determining whether this project will go forward."

In recent years, analysts and the industry's own statements have cast serious doubt on the conclusion that tar sands extraction would continue at the same rate without KXL. A Goldman Sachs report last year, for instance, questioned whether rail shipments could replace a pipeline slated to transport 830,000 barrels of crude per day. And the Royal Bank of Canada has said that blocking Keystone XL would significantly inhibit Canada's tar sands development.

TransCanada has been awaiting a U.S. decision on the project for more than five years—though “waiting” is hardly the right word, since in the interim the company has already built the pipeline’s southern leg from Oklahoma to Texas and worked to gain all of the land necessary for the project's right-of-way, including by using the threat of eminent domain. OnEarth editor-at-large Ted Genoways, who is based in Nebraska, has extensively covered TransCanada’s hardball tactics and the resulting backlash in cornhusker country, including citizen lawsuits that could still impede the project, even if it wins Obama’s OK.

It’s hard to convince people if it looks like the game is rigged, and the government’s process for evaluating the pipeline has been plagued by conflicts of interest. ERM Group, the agency’s primary contractor on Friday’s environmental study, has financial ties to TransCanada—a fact the department tried to hide, as Mother Jones reported last year—and is a member of of industry groups that have lobbied for the pipeline’s approval.

Buzzfeed revealed Thursday that TransCanada even recommended ERM to the State Department, saying that the consulting firm had no significant conflicts. (And ERM is actually the second firm hired by the State Department on the Keystone project that counts TransCanada as a client.) All of this is under investigation by the State Department’s Inspector General, and a report is expected soon.

Even the EPA has been critical of the State Department's analysis. After the department's draft conclusions were released last March, the EPA filed a response saying that the report had downplayed the pipeline's impact on carbon pollution. A coalition of environmental groups, including NRDC, published a report last year offering evidence that KXL would increase U.S. carbon emissions by far more than the State Department said Friday—the yearly equivalent of building 51 new coal-fired power plants or putting 37 million additional cars on the road.

So there’s plenty to draw on if the president wants to nix the pipeline. Conservationists will continue to press him—they’ve staged massive protests and civil disobedience at the White House in recent years and made the pipeline an important political issue, and vigils in reaction to the State Department report are planned throughout the country on Monday. "Bottom line," wrote NRDC international program director Susan Casey-Lefkowitz, "the Keystone XL tar sands pipeline is a project that brings risk with no reward."

In his State of the Union address on Tuesday, the president said “we have to act with more urgency” on climate change in order to leave our children and grandchildren “a safer, more stable world, with new sources of energy.” KXL opponents hope to hold him to that.

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