The election of liberal Justin Trudeau as Canada’s new prime minister could give President Obama the cover he needs to finally reject the Keystone XL pipeline, energy experts say.
“They can kind of take this opportunity to reject the pipeline and have a fresh start with a new administration whose views on energy and climate are going to be far more aligned with the Obama administration,” said Chris Brown, program assistant at the Atlantic Council’s Global Energy Center.
Trudeau has expressed support for the pipeline project, but it is more tepid than that of his predecessor, the conservative Stephen Harper. The Keystone XL pipeline would transport oil from the Canadian tar sands in northern Alberta to the oil refineries along the Gulf of Mexico.
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The new prime minister-designate has said he wants to work closer with the United States on the project, proposed by energy company TransCanada. He is seen as more of an environmentalist than Harper, who was viewed as a hawk on the Keystone XL. During the campaign, Trudeau accused him of worsening U.S.-Canada relations over the project.
Brown speculated that Trudeau’s election could lead to better relations between the countries. If Obama had decided to reject the pipeline while Harper was in office, it could have been a blow to American-Canadian relations, Brown said. The State Department has been reviewing the project for seven years.
Obama’s indecision on the project, and possible opposition, angered Harper. The conservative Canadian believed the Keystone XL pipeline would be a boon to Canada’s economy and bring jobs to the areas surrounding the pipeline.
Ben Zycher, a resident scholar at the American Enterprise Institute focusing on energy and environment policy, said it’s almost certain the Keystone XL pipeline won’t be built while Obama is in office. But that reality isn’t affected by the Canadian election, he said.
“The Obama administration is never going to approve it, and that’s been obvious for a long time,” Zycher said.
Obama’s skepticism is based on the possible greenhouse gas emissions that could come from burning the oil found in the Canadian tar sands. Given his recent push on environmental policy and regulation, such as the Clean Power Plan, ozone regulations and his trip to Alaska to highlight climate change, insiders believe Obama is leaning toward rejecting the pipeline or leaving the decision to a future administration.
Those environmental concerns are something Trudeau would be willing to work on with the United States.
“In the 21st century, [getting oil to the market] means doing it right,” he said in a report by The (Toronto) Star.
Andrew Lipow, president of Lipow Oil Associates, said that collaboration will be the major change between Harper and Trudeau. Trudeau likely would be more open to environmental concessions on carbon emissions and increased safeguards on the extraction of tar sands oil, and those could possibly come in exchange for Keystone XL approval in the future.
Trudeau’s other policies, such as his desire to see Canada withdraw from conflicts in the Middle East, show he’s not beholden to U.S. policy.
“It’s certainly not clear to me that this is going to be bad for Keystone,” Lipow said. “Now that he’s in charge of the country, Trudeau has to decide how much influence energy has on the Canadian economy.”
Trudeau’s position on Keystone XL might matter more depending on who wins the presidency in November 2016.
Former Secretary of State Hillary Clinton says she’s against the project, but Zycher speculated she could flip-flop. A Republican president would be in favor of the project.
The real question will be if the price of oil makes the project worthwhile.
“The question is whether the economics justify it, given the oil prices,” Zycher said. “That’s a little dicier than when oil was at $80 or $100 per barrel.”
Observers are divided over whether pipeline construction should continue when oil prices are so low.
Pipeline infrastructure is needed in the tar sands areas of Alberta and Saskatchewan where the drilling takes place due to their isolated location, Brown said. Even with the collapse in oil prices during the last year, drilling in the tar sands is continuing and Brown thinks the industry wants to build pipelines now to save transportation costs.
Trudeau has expressed concern about rail transportation of crude oil, citing crashes and derailments that have led to deaths, massive fires and towns being evacuated.
In Washington, it doesn’t appear the State Department will make an immediate decision in the wake of the Canadian election.
Secretary of State John Kerry, speaking at the Climate and Clean Energy Investment Forum, said Trudeau’s election doesn’t change the State Department’s machinations.
“The decision on Keystone is being based on the merits and on the countervailing balance of all the input that has come from a very exhaustive agency review,” Kerry said. “I have said again and again I want to get that done as fast as possible, and that is very true. I want to get it done.”
Brown added there’s no real political loss for Trudeau’s new administration if Obama rejects the pipeline. Given Trudeau’s concerns about the environment, he could accept the Obama administration’s decision and wait until January 2017 when a new president enters the White House. Should that new president be a Republican, it’s almost certain the pipeline would be back on the table, Brown said.
“He doesn’t really have anything to lose by saying I support a pipeline that almost certainly will not exist under the current administration,” Brown said.
With the prospect of an Obama rejection of Keystone XL finally on the horizon, environmental groups are rejoicing in the victory of Trudeau’s Liberal Party.
Lena Moffitt, director of the Sierra Club’s Stop Dirty Fuels campaign, said Trudeau’s election is widely being seen as a rejection of Harper’s policies, a major objective being building Keystone XL.
Moffitt said the Liberal Party’s win gives the party a mandate, and part of that could be strong policies against climate change.
Environmental groups also are encouraged by Trudeau’s opposition to the Northern Gateway pipeline that would bring oil from Canada’s tar sands to British Columbia for shipping on the Pacific Ocean. He has not made a judgment on a third pipeline, Energy East, that would go from the tar sands east across the country.
“The lack of success on the part of Stephen Harper shows that defining Canadian international policy around the expansion of the tar sands doesn’t work and can no longer be the rule of the land,” Moffitt said.
