By Kenneth P. Green
and Taylor Jackson
The Fraser Institute
The Keystone XL saga has taken a new twist. On Jan. 6, TransCanada (the company that would have built and operated the Alberta to Texas pipeline) launched two lawsuits over U.S. President Barack Obama’s November rejection of the pipeline.
One of the lawsuits will challenge the president’s constitutional authority to grant permits when Congress has already acted, as it did in early 2015 when a bipartisan bill was passed approving the construction of the pipeline.
The second lawsuit seeks damages of more than US$15 billion by issuing a claim under Chapter 11 of the North American Free Trade Agreement (NAFTA) on the basis that the denial of the permit was “arbitrary and unjustified.”
For the NAFTA case, TransCanada argues that:
“In its decision, the U.S. State Department acknowledged the denial was not based on the merits of the project. Rather, it was a symbolic gesture based on speculation about the perceptions of the international community regarding the Administration’s leadership on climate change and the President’s assertion of unprecedented, independent powers.”
The courts will eventually decide whether TransCanada has merit in either case. But one thing is certain; the Keystone XL pipeline decision should have never come to this if the major concerns surrounding the pipeline were safety and climate change, which they were.
When Obama rejected Keystone XL, he cited the urgency of climate change and the need for American leadership on that problem as key reasons for his decision.
As we previously wrote, concern over climate change was a weak reason to reject the pipeline. Contrary to some of the rhetoric out there, Canada’s oil sands have a very small impact on global greenhouse gas (GHG) concentrations, accountingfor only 0.1 percent of global GHG emissions.
The tiny emissions impact of the oil sands was best captured by comments from Fatih Birol, now the executive director of the International Energy Agency’s (IEA). In a 2014 interview, he stated that “to be frank, the additional CO2 emissions coming from the oil sands is extremely low.”
And long before oil prices collapsed, when the IEA was expecting oil sands production to increase by more than three million barrels a day over 25 years, Birol added “the emissions of this additional production is equal to only 23 hours of emissions of China – not even one day.”
In fact, Obama’s own State Department review of Keystone XL found that transportation alternatives (only rail, rail/pipeline, rail/tanker) to Keystone XL could increase annual CO2 emissions from transport by between 27.8 percent and 41.8 percent.
And when it comes to protecting the environment from oil spills, Keystone XL has clear advantages over transportation by rail, the logical fallback if pipelines are blocked.
Our recent analysis of pipeline vs. rail safety in the transportation of oil and gas found that rail is more than 4.5 times more likely to experience an occurrence when compared to pipelines. Another analysis using U.S. data came to similar conclusions as we did, but also found that transportation of oil and gas by pipelines is associated with fewer injuries.
Only time (and the intricacies of U.S. law) will tell what the outcome of TransCanada’s lawsuits will be. But the saga of Keystone XL should never have ended up where it did. When it comes to moving oil and protecting people and the planet, pipelines are our best option.
Kenneth P. Green is senior director of natural resource studies, and Taylor Jackson is a policy analyst, at the Fraser Institute.