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Furor Over Keystone Pipeline Caught U.S. and Canada Flat-Footed on Climate Change

Despite climate sweet talk from Alberta now, Keystone is a saga of missed opportunity and diplomatic failure, experts say.

Mar 20, 2013
President Barack Obama and Prime Minister Stephen Harper at a press conference i

As part of its effort to persuade the United States to accept the Keystone pipeline and the oil sands fuel it would carry from Canada, the province of Alberta is advertising itself as an environmental leader at the cutting edge of clean energy development.

On Sunday, the province took out a half-page ad in the New York Times asserting that it is "committed to raising the bar higher on its leading climate change policy."

"Our past, present and future environmental management actions—including the fact that Alberta already has a price on carbon and was the first place in North America to legally require all large industry to curb emissions—are unmatched by any oil producing region in the world," Premier Alison Redford said in a companion statement.

"To ignore the good work done in Alberta to begin to reduce greenhouse gas emissions—while others around the world simply talk—is disingenuous in the extreme," she added in a speech the next day.

Alberta's talk about its actions to address the climate issue came as Redford prepares for a trip to Washington next month to lobby for the project—her fourth such visit in 18 months.

But the ad, which the opposition immediately said was misleading, was a lobbying tactic, not a diplomatic overture. Indeed, many experts see the long-running Keystone saga as a failure of diplomacy on all sides.

Foreign policy experts say the Keystone could have been used to forge a grand, cross-border bargain to jointly address climate change—a bargaining chip toward agreements on carbon taxes, cap-and-trade regimes, or other comprehensive approaches.

But both governments are so ensnarled in their own politics they didn't work together as they have on so many past environmental issues. Instead, the furor over this single project has overshadowed the two countries' overall energy and environmental relationship and left little more than a war of words between those with vested interests on all sides.

Sometimes the facts get bent in the process.

Official statistics show that Alberta lags the rest of Canada in controlling emissions, even as Canada itself is falling short of its promises.

Canada's most recent annual emissions trend report projected that the country will achieve only half the nationwide greenhouse gas reductions it has pledged to make by the year 2020—its promise to cut them 17 percent compared to 2005. (The U.S., too, is struggling with the same target, reached at negotiations in Copenhagen in 2009.)

Alberta, which like other Canadian provinces controls its own natural resources, has the least ambitious target of any province. If met, it would leave its emissions well above the 2005 level. Absent any new regulations, Alberta's emissions are projected to grow from 231 million tons to 285 million tons. (One ton of carbon is roughly a month's typical energy use by an American household, or two month's driving of a typical car, according to an estimate by the University of Arizona.)

The most significant source of Alberta's future emissions is the production of bitumen, the thick oil that is mined from the tar sands. The province expects it will take decades to bring them down to about 2005 levels.

As a public relations tactic, the pro-environment posture sounds good. But as a measure of real progress on climate change it falls short.

Broad Policy Context Urged for Years

For years, foreign policy experts have urged Canada and the United States to do more to address energy and climate issues in the context of far-reaching, well coordinated bilateral agreements.

A detailed report for the Canadian International Council, for example, cited "opportunities to broaden climate change and clean energy discussions," including "the potential impact of Canadian and American climate change policy on oil sand exporters."

"Canada could face challenges in making the case that the country is moving in a clean energy direction if it falls short on climate change action," said the report, published in 2010, as the Keystone controversy grew and Canada struggled with its poor image on climate change. "'Greening' Canada's energy sector is not an altruistic alternative but an initiative that makes good business sense in securing access to our only substantial energy export market," the United States.

At about the same time, the Environmental Protection Agency was urging the U.S. State Department to put a bigger frame around the Keystone XL pipeline, which was already drawing criticism from environmentalists.

"While we recognize that an objective of the applicant's proposal is to construct a pipeline to transport oil sands from Canada to Gulf Coast refineries in the United States, we believe the purpose and need to which the State Department is responding is broader," the EPA said in a 2010 letter highly critical of the project's first environmental impact analysis.

"Accordingly, EPA recommends that the State Department frame the purpose and need statement more broadly to allow for a robust analysis of options for meeting national energy and climate policy objectives."

Almost three years later, the furor over the Keystone decision is still overshadowing the two countries' overall energy and environmental relationship, said foreign policy specialists.

The decision on Keystone now seems destined to be narrow, a straightforward yes or no. Rather than using the pipeline application as an opportunity for far-reaching diplomacy, the State Department will most likely accept it or reject it almost as if stamping a visa.

Political Currents Have Precluded a Deal

Too many powerful political currents on both sides of the border are running against any larger agreement, analysts say.

"We live in a political world, not a reasonable one," said Simon Dalby, a professor at Balsillie School of International Affairs in Waterloo, Ontario, who specializes in political economy and climate change.

Broadening the agenda is important because in the world of energy, Canada and the United States are like a single body, and Keystone is just one vein in its intricate circulatory system.

If the energy streaming in both directions across the border is what fills the veins, greenhouse gas emissions inevitably return along the arteries—to be exhaled as carbon dioxide.

But if the patient is ill, there's not much agreement on the treatment.

Not only are Washington and Ottawa split ideologically, but each nation also is divided internally, along both partisan and regional lines, when it comes to energy and the environment.

In Washington, Republicans (and some Democrats) adamantly oppose either carbon taxes or cap-and-trade. They not only demand that the Keystone be approved, but are once again pushing legislation that would require its approval, thereby taking the decision out of President Obama's hands.

In Canada, the majority Conservative government vigorously supports the oil sands development, while the opposition New Democrats express doubts and push for comprehensive measures to tackle greenhouse gas emissions.

In a speech in Washington last week, Thomas Mulcair, who leads the New Democrats, said that if his party came to power it would move toward a global cap-and-trade limit on emissions patterned on the American-Canadian approach in the 1980s, which controlled sulfur dioxide emissions from power plants that caused acid rain.

"It worked, we have proven that it worked, and we can use that model," he said. Through arduous negotiations the United States and Canada have reached agreements as far reaching as the North American Free Trade Agreement, as focused as disputes over timber, and as globally significant as the world-wide Montreal Protocol on ozone-depleting chemicals.

A 2011 report by the Congressional Research Service that examined U.S./Canada energy and environmental ties said "recent developments have greatly complicated that energy relationship," citing the debate over Keystone as one of many factors in "the tangled web policymakers in both countries must navigate as they consider future energy, environmental and transportation decisions."

"It may be helpful to consider these proposals in the broadest possible North American context," the report said.

There are countless ways for the two countries to join forces to offset what both nations concede are growing emissions from the tar sands.

The two nations do have a bilateral effort under way, but it is aimed mostly at green technology and alternative forms of energy and isn't directed toward a bargain to address climate change.

Some call for expanding the opportunities for Canada to ship hydropower to the states, helping them meet their renewable fuel standards. Wind power can be shipped back, trading an intermittent source of electricity against a steady, reliable source, both of them carbon-free.

Even without a bi-national deal on carbon taxes or trading, some provinces and states have begun moving in common directions. Quebec, for example, is joining in California's cap-and-trade program. Some people think that could fertilize a future, bigger agreement expanding the market-based approach to cutting emissions.

In general, Canada has long recognized the importance of harmonizing its environmental regulations with those of the United States. On auto fuel efficiency standards, Canada follows. Sometimes, it even leads the way.

For example, Canada recently imposed rules requiring its existing coal-fired electric utilities to eventually meet strict new emission limits, something the United States is just starting to consider. And Canada is preparing new regulations on oil and gas industry emissions, although how strong they will be, nobody yet knows.

Glass Houses, Poisoned Chalice

David Sawyer, vice president for climate change and energy at the Canada-based International Institute for Sustainable Development, said Canadian officials are irked by U.S. criticism of their environmental performance, given that the United States also is struggling to come up with policies that will meet the Copenhagen targets for 2020. "Yeah, we all have a problem," he said. "But people who live in glass houses shouldn't throw stones."

Michael Levi, director of the energy security and climate change program at the Council on Foreign Relations, testified before the House Foreign Relations Committee that rejecting the Keystone XL pipeline would be "a clear negative for U.S.-Canada relations.

"To be certain, there is considerable controversy within Canada over oil sands expansion," he continued. "But even among Canadians who are skeptical of the oil sands, many would chafe at what they would see as heavy-handed U.S. intervention."

Alberta's interest in Keystone is especially keen. Without the pipeline to ease access to the world export market, it is difficult to drain the glut of oil that has depressed prices – and hit Alberta's budget hard, as royalties have plummeted, costing the province $6 billion this year.

That is yet another reason many foreign policy analysts expect the State Department to accede to Canada's insistence on Keystone.

"I assume the oil sands will continue to be produced in Alberta," said Stephen Brick, a senior fellow in energy and climate at the Chicago Council on Global Affairs. "That's the baseline – and it is not a matter for international negotiation. It's hardly, within Canada, even the basis for federal negotiation."

Satya Brata Das of Cambridge Strategies Inc. in Edmonton, Alberta, said it might be possible under the North American Free Trade Agreement to someday negotiate sweeping new standards for the development of energy resources. But he cautioned that the standards would have to treat Canada, the United States and Mexico on the same terms. "That would be quite a robust way to move," he said.

However Keystone is resolved, the broader problems seem likely to remain, lying fallow until a more favorable political season.

And that means they probably won't be resolved before the next proposed pipeline comes along to carry the ever-growing supply of oil sands products.

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