Keystone Pipeline: Oil Price Drop Will Worsen Climate Impact, EPA Warns

Falling oil prices have changed the economic viability of the Keystone XL pipeline — and that means the project would result in much higher carbon pollution, the Environmental Protection Agency (EPA) said on Tuesday.

The finding hands President Barak Obama new grounds on which to reject the pipeline, only days after the Senate voted to force approval of the project and as the House Republican leadership moved to a final vote that could send a pipeline bill toward the president’s desk as soon as next week.

Photo by Michael FleshmanThe EPA says that the recent drop in oil prices means that Keystone would promote further expansion of the Alberta tar sands, unleashing more greenhouse gas emissions, and worsening climate change.

In a letter to the State Department, the EPA said the recent drop in oil prices meant that Keystone would indeed promote further expansion of the Alberta tar sands, unleashing more greenhouse gas emissions, and worsening climate change.

“Until ongoing efforts to reduce greenhouse gas emissions associated with the production of oil sands are more successful and widespread development of oil sands crude represents a significant increase in greenhouse gas emissions,” the EPA’s assistant administrator, Cynthia Giles, wrote in a letter posted on the agency’s website.

The agency said building the pipeline could increase emissions by as much as 27.4m metric tons a year — almost as much as building eight new coal-fired power plants.

Campaigners said the finding gave Obama all the information he needed to reject the pipeline. Obama had earlier said he would take climate change into account when rendering his final decision on the project.

“As of today the president has all the nails that he needs to close the lid on this particular boondoggle of a coffin,” Bill McKibben, the founder of 350.org, which led environmental opposition to the pipeline, told a conference call with reporters.

The president has final authority over the pipeline — much to the frustration of TransCanada, the pipeline company, which has been trying to build the project for more than six years.

TransCanada reiterated that production in the Alberta tar sands was expanding anyway, suggesting that Keystone would have no effect on climate change. “The oil that Keystone XL will deliver is getting to market today — that is a fact,” Shawn Howard, a spokesman for the company, wrote in an email.

The State Department had earlier concluded that Keystone would have little impact on developing the tar sands – and that the oil would be extracted anyway.

However, one year later, the assumptions in the State Department review no longer held, the EPA said. Falling oil prices made it less likely producers would pay the high costs of shipping by rail, the agency found.

“Given the recent variability in oil prices, it is important to revisit these conclusions,” the EPA said.

With oil trading below $50 a barrel, the agency went on: “Construction of the pipeline is projected to change the economics of oil sands development and result in increased oil sands production, and the accompanying greenhouse gas emissions, over what would otherwise occur.”

The EPA also raised questions about the State Department’s review of alternative routes to the Keystone XL. The pipeline crosses three states, and has encountered legal opposition from landowners in Nebraska.

The latest finding from the EPA offers Obama more solid ground on which to reject Keystone.

Republicans in Congress have also jumped on the pipeline, making it one of their top legislative priorities and voting to take the decision over the pipeline out of Obama’s hands.

On Tuesday, House majority leader Kevin McCarthy said he would move to take the Senate bill up for debate next week, setting up the long-awaited showdown with the president’s veto pen.

The White House said Obama would veto any law seeking to force approval of the project. Obama has said that climate change will factor into that decision.

Campaigners said the EPA finding left Obama will little option but to turn it down.

“The Environmental Protection Agency has just affirmed what has been clear all along: the Keystone XL tar sands pipeline fails the president’s climate test,” said Michael Brune, president of the Sierra Club.

“These comments re-confirm that this dirty and dangerous project would significantly increase carbon pollution. That’s the standard the president has set for rejecting Keystone XL, so we fully expect him to do just that.”