Workers clean up bitumen on this marsh after it seeped up through a fissure under the water north of Alberta's Cold Lake last year. Photo: ED KAISER/Postmedia News The proposed Keystone XL pipeline to connect Canadian oilsands with U.S. refineries and ports could have a much larger impact on greenhouse gas emissions than previously assumed, according to a new study.
If the controversial pipeline gets the go-ahead it might lower global oil prices, increase consumption and quadruple the total greenhouse gas impact of the project, says an analysis published Sunday in the journal Nature Climate Change.
It also points to gaps in existing environmental and economic assessments and says a U.S. State Department’s analysis of Keystone XL didn’t account for the pipeline’s potential effects on global oil markets.
“The State Department’s assessment has overlooked the pipeline’s potentially most significant GHG (greenhouse gas) impact: increasing oil consumption as the result of increasing supplies and lowering prices,” concludes the report by the Stockholm Environment Institute, a non-profit international think-tank.
The State Department report, released in January, concluded that the Keystone XL pipeline would not substantially worsen carbon pollution. U.S. President Barack Obama, who has yet to announce a decision, indicated last year he might approve the 1,900-kilometre pipeline if it would not “significantly exacerbate” greenhouse gas emissions.
The Harper government has been lobbying Washington for years to approve the contentious pipeline that would carry 830,000 barrels of diluted bitumen a day from Alberta’s oilsands to refineries on the U.S. Gulf Coast.
There has long been concern that Alberta oil is “dirtier” than other oil “but globally, an even bigger impact of expanding oilsands production would be the fact that it would decrease prices and therefore increase global oil consumption,” said Peter Erickson, lead author of the study.
“If it increases consumption, prices go down, that’s textbook economics,” he said in an interview.
The new analysis focuses on “price effects” and says that “depending on the extent to which the pipeline leads to greater oilsands production” the annual impact of Keystone XL could range “from virtually none to 110 million” tonnes of CO2 annually. That is four times bigger than the one-million tonne to 27-million tonne spread found by the State Department which did not account the effects on the global oil markets, the study says.
The potential release of 110 million tonnes of carbon dioxide a year is significant. “This pipeline could essentially counteract the benefits of other U.S. policies being considered,” said Erickson, pointing to new standards to reduce greenhouse gas emissions from cement kilns and industrial boilers.
The report and its conclusions are sure to be controversial.
It’s “a welcome contribution to the debate even if the numbers will continue to be debated hotly,” Werner Antweiler, an economist at the University of B.C.’s Sauder School of Business, said in a release about the study issued by the Science Media Centre of Canada.
Antweiler says the full effect of the Keystone XL pipeline — as well as the proposed Enbridge Northern Gateway, the Kinder-Morgan Trans Mountain Expansion and the TransCanada Energy East project — will depend on several factors including the impact of additional pipeline capacity on production, and whether the oil displaces other more costly or more polluting energy sources such as coal.
Despite the caveats he expects the pipelines to increase emissions. “I reckon that additional pipeline capacity will ultimately lead to a net increase of greenhouse gases,” said Antweiler. “The exact amount may be uncertain, but it is certainly not a negligible amount.”
Mark Jaccard, a sustainable energy expert at Simon Fraser University, describes the new report as a “sound analysis” that points to “a flaw” in the U.S. State Department’s assessment of Keystone’s impact on greenhouse gas emissions.
“Expanding oil supply infrastructure is likely to have some effect on oil prices by providing market access to more oil supply for consumers,” Jaccard says.
“Of course, there is considerable uncertainty about the magnitude of the effect,” said Jaccard. “The authors represent this uncertainty by selecting from high and low points of a probability distribution — showing that the effect on oil consumption and emissions can range from 0 to 110 MtCo2 per year.”
In June, Jaccard and a Canadian-led group of academics, writing in the journal Nature, said Canada and the U.S. should halt approval of the oilsands project and pipelines until developments are “consistent” with the governments’ own commitments to cut carbon pollution. “Anything less demonstrates flawed policies and failed leadership,” they said.
That report said “a more coherent approach, one that evaluates all oilsands projects in the context of broader, integrated energy and climate strategies, is sorely needed.”
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