An interesting article was posted by Jonathan Chait of New York Magazine (linked) arguing that Keystone XL (KXL) is the wrong fight for the environmental community to be picking. Instead, he argues, the proposed EPA regulations on coal-fired power plants are a more promising target, since they have a larger potential magnitude of benefit than stopping KXL. While I agree that the EPA regulations are a critical step, I’m skeptical of this argument for several reasons. For one, I don’t think politics works in the way he seems to be assuming. There’s no reason why the campaign against KXL will necessarily trade off against the campaign for better regulation on coal power plants. There are a lot of environmentalists and it’s possible that any loss by division of forces would be offset by the gain in multiple avenues for advancement; abandoning one may pass over an opportunity for a victory.
More importantly, though, the claim of 0.06-0.3% reduction in emissions is artificially low due to the system boundaries chosen and some modeling assumptions. Having spent the last several years doing Life Cycle Analysis of energy systems, I’m enjoying this opportunity to dive deep into the analysis.
1) The comparison ignores the market-mediated effects of having this extra supply. There is a LOT of tar sands oil in Canada, if it had a readily available, cheap path to market (i.e. Keystone XL) that supply would make a meaningful difference in global oil markets, probably on the order of several dollars per barrel at US spot markets. That difference would likely be reflected in reduced consumption. Gasoline and diesel aren’t highly elastic markets, but they do respond to price to some degree.
2) The energy to pump the oil seems either underestimated or left out completely (the methodology isn’t entirely clear on this). If they’re using DOE or DOT reference values for the amount of energy needed to pump the oil through an existing pipeline, that’s going to be an underestimate, since most of the products from tar sands production are more viscous and contain more solids. This means more heat is required to reduce viscosity and the pumping burdens are likely higher. Pumping oil a thousand miles through a pipeline isn’t a big energy burden, compared to the rest of the economy, but it’s probably not so small that it can be ignored.
3) The assumption that production will proceed at roughly the same speed without KXL may be flawed. Right now there isn’t sufficient refining capacity in Canada or the northern U.S. to accommodate tar sands crude. KXL is so important to the industry because it brings the crude to the Gulf Coast where there is ample refining capacity that is already designed to accept very sour (high sulfur) and very heavy oils, since that is largely what is produced in the Gulf, Mexico and Venezuela. Building more refineries with this capacity would be a tremendous capital investment.
Massive capital investment in heavy oil processing is unlikely because over the next 20 years, the U.S. oil market is going to be dominated by the effects of fracking (and I’d suggest looking into some of Amy Meyers Jaffe’s excellent work on the subject, including this and this). Most of the products produced by fracking don’t require heavy oil refining capacity, have lower GHG emissions (and so might be more tolerable under future climate policy, or California’s current Low Carbon Fuel Standard) and are likely to be cost competitive with tar sands. With global oil prices likely to take a fairly substantial drop due to the availability of crude from the recent major investments in fracking, there isn’t much of a business case for building a lot of expensive refinery capacity where it will do much good for the tar sands.
The long term implication of this is that it’s likely that without Keystone XL, the rate at which tar sands oil is extracted and utilized will be significantly lower, as would be emissions in a world without KXL. It’s quite likely that eventually, all that tar sands oil will be burned, but everything we can do to slow the rate at which carbon is removed from the ground and put into the atmosphere is a good thing for the climate.