Study says Obama's worst Keystone XL fears could come true

President Obama is on the record stating he would approve the Keystone XL pipeline from Canada to the American Gulf Coast only if it did not significantly exacerbate climate change. Now, a new study is saying it could potentially do precisely that.

The controversial pipeline could spur up to 121 million tons in new carbon dioxide emissions – four times the State Department’s 27 million ton estimate, according to the study, published Sunday in Nature Climate Change. Researchers contend the pipeline would boost the global supply of oil, which would drive down prices and drive up consumption.

The oil industry rejects the researchers' assumptions. Keystone will not affect the supply of oil, merely how it goes to market, officials say. But for an administration that has repeatedly delayed approval of the pipeline because of environmental concerns, the study provides new food for thought.

Is it likely to sway Mr. Obama’s decision to approve or reject the pipeline? Probably not, says William Galston, a senior fellow in governance studies at the Brookings Institution, a Washington-based think tank.

The approval of the Keystone pipeline is now primarily a political decision, he says, and Obama may be holding off until an opportune moment.

“In my judgement, the delay in reaching a decision on this issue is completely driven by political imperatives,” he adds. “I can imagine a situation in which the administration would try to use Keystone as a bargaining chip” after the midterm elections.

The proposed pipeline would carry 800,000 barrels of oil a day from Alberta to Gulf Coast refineries. Controversy has plagued the approval process for years, with environmentalists arguing the pipeline would increase greenhouse emissions and threaten wildlife and water on its path through the US. Pipeline advocates say Keystone XL would shore up US energy security by increasing imports from Canada.

If Keystone did become a political bargaining chip, it wouldn’t be a surprise. Republicans floated Keystone XL as a point of leverage in negotiations with Democrats over the budget and the debt ceiling. Rep. Paul Ryan (R) of Wisconsin mentioned it as a concession Republicans could extract from Democrats to end last fall’s government shutdown.

Because the section that crosses the US-Canada border requires State Department approval, creation of the pipeline largely hinges on Obama.

The argument made by Sunday's study is founded on the calculation that “for every barrel of increased production, global oil consumption would increase 0.6 barrels owing to the incremental decrease in global oil prices.” In other words, increased supply would lower prices – and that would drive up demand for oil, leading to more burning of fossil fuels and more emissions.

But the oil industry argues that those production increases will occur with or without Keystone XL.

“The findings in the study are irrelevant,” says Sabrina Fang, spokeswoman for the industry-backed American Petroleum Institute, in an e-mail statement Monday. Ms. Fang says approval of the pipeline will not induce additional development of the Alberta oil sands. Development will occur either way, she says – it’s only a matter of whether oil sands flow into the US by rail or by pipeline.

Obama has been mum on the issue since the State Department’s most recent delay on a decision this April.  

“It’s by no means clear what will drive the calculus after the fall election,” Mr. Galston says. A decision on Keystone XL is not expected until after those midterm elections.

Some think Obama and Democrats have more to gain from approving the pipeline before the elections.

“He’s got a number of Democrats who would get a boost if he approved it,” says Charles Ebinger, director of the Brookings Institution’s Energy Security Initiative, mentioning vulnerable Democrat Sen. Mary Landrieu of Louisiana. “If he’s going to compromise and approve it, he might do better by his party to do it now.”

The fact that he hasn't done so could signal that Keystone will never come to fruition, and that's why Obama is punting the decision until after the elections.

Mr. Ebinger adds: “I think if he were going to use it as a bargaining chip, he may have already done it.”