Climate Change Is the Real Issue Behind Keystone

Asking the wrong questions about Keystone.

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Miles of pipe ready to become part of the Keystone Pipeline are stacked in a field near Ripley, Okla. on Feb. 1, 2012.
Financial analysts say the Tar Sands in Canada could meet the U.S.' energy needs for the next 30 years if 170 billion barrels of oil are recovered.

One of my ancestors invented an ejector cartridge for single-shot pistols – we have the original patent hanging up in our living room - but several others also invented something quite similar at roughly the same time as the gun industry raced to find ways to fire more bullets faster.

Another ancestor helped put cowcatchers on the front of locomotives so that they could push cows off the tracks as railroads were built across North America. But, as in the case of gun innovation, many others came up with a similar idea at roughly the same time. Cows were blocking trains, and it just made sense to put something on the front of the locomotives to move them off the tracks.

I tell these two stories not to promote automatic weapons or railroads, but to make a point. Innovation happens when it's ready to happen – and, more often than not, lots of people seemingly have the same "light bulb" idea at just about the same time. It's what happens when something is ready to evolve and innovate. History is full of such examples.

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Right now, there is an awful lot of dirty, heavy, crude oil sitting underground in vast areas of the Tars Sands region of Canada. The reserves of this very heavy crude oil – which is more expensive to refine and bring to market than any other type of oil – are big enough that Bill Gates and Warren Buffett once visited the region just to marvel at the untapped economic potential and money to be made there.

The only thing keeping much of this heavy, unrefined crude oil in Canada is cost. It's why TransCanada and the oil industry needs the Keystone XL pipeline. It now costs $17 a barrel to ship this oil by rail. The cost would drop to $10 a barrel if it's shipped through a pipe. That's enough of a cost differential to matter – and potentially keep much of the oil locked up in Canada if Keystone isn't built.

By some accounts, the Tar Sands reserves are as big as anything in Saudi Arabia or Venezuela. All by itself, financial analysts say, the Tar Sands could supply all of the United States' energy needs for the next 30 years if 170 billion barrels of oil are recovered. It's that big.

But should it be recovered? That's the question that no one ever asks. TransCanada, Exxon Mobil, Suncor and every other big company looking to make trillions of dollars from the Tar Sands region just assumes that the answer is…well, yes, of course. They are already making money from the Tar Sands region. They just expect to make a lot more, with a bigger profit, if the Keystone pipeline is built.

But should it be built? That's another question that no one ever really asks, largely because it runs counter to the history and notion of innovation that has defined America. People invent things, companies innovate, new industries are born, and economic winners enjoy the spoils of victory.

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Yet it's a question that needs to be answered sooner rather than later now that we know, with scientific certainty, that we only have a limited amount of time in this generation - and a finite budget of carbon that we can burn globally - before we tip the earth's climate system towards an unstable and inhospitable state. The science question is settled. The economic one isn't yet.

This is the heart of the Keystone question. It's not whether America wants to continue to shift its oil dependence away from Saudi Arabia and Venezuela to its friendly neighbor to the north. Of course we do. Six previous presidents, from both parties, talked about American energy independence, and none delivered. Market forces did. The U.S. is now a net oil exporter, and Tar Sands oil will accelerate that development. The "energy independence" arguments around Keystone are, to put it simply, grist for ad campaigns and propaganda. Tar Sands isn't about energy independence – it's about money.

We will need oil for the foreseeable future, and it would be nice to get it from Canada. But the real Keystone question isn't about energy – it's about tipping the climate system. World leaders from the United States, China, India, Brazil, Canada, Japan and Russia are getting serious about confronting the climate issue in a meaningful way – and that's what is behind the real Keystone question.

When President Barack Obama added a paragraph to his national climate action campaign speech at Georgetown University in June, at the last minute, he asked a simple question. Will the Keystone pipeline accelerate climate change? The scientific answer is easy. Yes, it will. Tar Sands oil is harder on the climate than any other type of oil. Greenhouse gas emissions from Tar Sands oil are significantly higher than any other type of transportation oil sold in the U.S. If it's added to the carbon budget, rather than replacing existing oil in the market, it will make things worse.

But the economic question is far from settled – and what has made the decision such a difficult one for the White House. The State Department's environmental assessment may soon say, again, that rail traffic will simply replace Keystone if the pipeline isn't approved. But that isn't true. Most big, public financial assessments have said that the $7 per barrel differential makes it too costly. To fully develop the Tar Sands region, the various industries need the Keystone pipeline.

And the political question is even more difficult. The real, meaningful, lasting political legacy for Obama is the climate issue – not the energy issue. Keystone is simply a surrogate for that issue, and why it has become so important politically.

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So is there a way out of this box canyon for the White House on Keystone? Maybe. But it will require innovation and evolution on the issue that's been missing so far – its own "light bulb" moment when various people come up with the same path forward at about the same time.

It might go something like this. Canada has walked away from limits on greenhouse gas emissions. It needs to come back to the table, and set ambitious limits as the U.S. and China are now considering. There are innovative ways to more cleanly exploit Tar Sands oil to put it on par with other transportation fuels. The White House can require this before the oil is shipped across the border. And the U.S. can set economy-wide limits for a carbon budget so there is certainty that Tar Sands oil is a replacement in the carbon budget – not a new development explosion that accelerates climate change.

Climate change is the real issue behind Keystone. That's what has to be answered, and it will require a realistic look at what is at stake if – or when – the oil from that region is exploited.

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