Hot Potato #1: Keystone XL pipeline heading for approval

Keystone pipelineThe Keystone XL pipeline is probably the leading “hot potato” energy issue to environmentalists, energy companies and legislators this year, possibly bumping “fracking” (hydraulic fracturing in shale fields for natural gas) to number two. The Keystone XL pipeline would deliver Canadian oil sands from huge reserves in Alberta, Canada, to refineries in the gulf coast of Texas. Most of it is currently in operation, but the final phase is awaiting US State Department approval. It’s a critical issue to follow for those interested in the future of energy in the US.

The main question has been the impact the Keystone XL will have on greenhouse gas emissions, with environmentalists forecasting serious increases. The US Environmental Protection Agency expressed concerns in April over the environmental impact. This was a response to a US State Department analysis that the Keystone XL pipeline will have “no material impact” on US greenhouse gas emissions. The State Department findings were just backed up by a study from the IHS CERA consulting and research firm, which is likely to influence President Obama’s decision on whether to support approval. Like the State Department’s environmental impact review, the IHS study thinks that transportation by rail will probably play an important role in meeting environmental and economic targets. Alternate transportation routes could lead to oil sands production growth going to a higher level or remaining unchanged.

These findings won’t go over well with everyone. Cleanteach analysts and environmental groups tend to be skeptical about bias coming from firms like IHS toward more traditional oil industry backers and not so much toward alternative energy. It’s certainly a mixed bag – many would like to see the US free itself from the power of OPEC nations in setting domestic fuel prices causing economic disruption that goes back to the oil embargoes of the 1970s. To them, creating a strong relationship with Canada’s oil industry is a much better deal. Others would like to see America weaned completely off its addiction to oil, replacing it with alternative fuels and energy. To them, Keystone XL continues to not only support vehicle tailpipe CO2 emissions but increased greenhouse gas emissions to transport the Canadian oil in the first place.

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