US President Joe Biden has cancelled TC Energy’s Keystone XL crude pipeline project. The long-promised move came on the first day of Biden’s presidency, hours after he was sworn into office.
Proposed in July 2008, the 1,210-mile, 830,000-b/d pipeline received a draft environmental impact statement from the Department of State (under Pres. Barack Obama) in April 2010, stating that it would have limited effect on the environment. Opposition, already underway in Nebraska where the expansion to the Keystone pipeline would rejoin the already-operating system, mounted, prompting the State Department to extend the federal review process. On Aug. 26, 2011, the final environmental impact statement reiterated that Keystone XL would have little environmental impact.
After further demonstrations, in November 2011 the State Department told then-TransCanada that it had to reroute the line in Nebraska. Within days, the company agreed to do so. In December, the US Congress passed a bill compelling Pres. Obama to decide on the project within 60 days. Obama did so, denying its permits Jan. 18, 2012, just days before being inaugurated for his second term, on the grounds that the timeline imposed by Congress did not allow sufficient opportunity for review. He invited TransCanada to reapply and the project has been a political hot potato and administrative quagmire ever since.
A step backwards
The American Petroleum Institute described revoking the Keystone XL pipeline as “a significant step backwards both for environmental progress and our economic recovery,” citing the safety of pipelines relative to other modes of transportation and the need for reliable supplies of energy.
The move doubtless played well with the green wing of the Democratic Party, but at the cost of strained relations with both its labor base and key US ally Canada. North America’s Building Trades Unions, the National Association of Manufacturers, International Union of Operating Engineers, and United Association jointly wrote then President-elect Biden, urging him to leave Keystone XL’s permitting in place. Canada’s ambassador to the US, Kirsten Hillman, said the project was consistent with the environmental plans of both countries and that she would continue to promote it. Individual contractors hired to build the line also requested Biden reinstate the permit, but to no avail.
In the run-up to Biden’s inauguration, TC Energy announced that operation of the pipeline would be carbon-neutral from the start and be executed with 100% renewable energy sources by 2030. Just 2 days after it, however, the company suspended work on the project and cut 1,000 jobs, citing withdrawal of the Presidential permit, and describing Biden’s decision as overturning “an unprecedented, comprehensive regulatory process that lasted more than a decade and repeatedly concluded the pipeline would transport much needed energy in an environmentally responsible way while enhancing North American energy security.”
A better, if less symbolically dramatic, choice would have been to leave the permissions in place and Keystone XL’s fate to the marketplace. Under this scenario if the pipeline made economic sense versus the alternatives it would get built. And there has been competition. While Keystone XL was stalled, other avenues for export of Canadian crude advanced. Projects led by Enbridge Inc.’s Line 3 replacement and the Canadian government’s Trans Mountain expansion will add 950,000-b/d or more of export capacity by or before what was Keystone XL’s planned late-2023 in-service date.
After years of leadership obsessed with little more than sending signals to its base, the US needs pragmatic solutions to the problems that face it. This Day 1 gift to a certain faction of supporters could be just that, a reward offered to score points with some of those who supported Pres. Biden in his run for office. It could also, however, be a harbinger of policies to come. Either way it was the wrong choice.