U.S. President Obama has rejected the TransCanada Keystone XL pipeline that would have run from the Alberta oil sands down to Texas and the Gulf Coast.
Obama made the announcement from the Oval Office on Friday morning, saying that the pipeline “would not serve the national interests of the United States” and added how Canadian Prime Minister Justin Trudeau had expressed his disappointment.
Trudeau released a statement shortly after, stating: “We are disappointed by the decision but respect the right of the United States to make the decision. The Canada-U.S. relationship is much bigger than any one project and I look forward to a fresh start with President Obama to strengthen our remarkable ties in a spirit of friendship and co-operation.”
The $8 billion project which received the go-ahead from Canada’s National Energy Board in 2010 was expected to be rejected, says UBC chair in International Trade Policy, Werner Antweiler of the Sauder School of Business.
“There was nothing to be gained economically for the Obama administration. The boom in fracking has made the United States very independent of Canadian oil, and so they can move on and not suffer any economic repercussions.”
But Canada’s economy, specifically Alberta’s, may suffer in response.
Extra pressure will now be placed on the successful approval of two pipelines from Alberta to the rest of Canada, the TransMountain pipeline to B.C. and the Energy East pipeline to New Brunswick.
Antweiler says that if Canadians don’t want these pipelines approved, they better be prepared to pay much more for their oil consumption.
“If the pipelines aren’t built, the oil still gets to market but it will get to market at a higher price, like being transported by rail.”
Specifically in B.C., the Kinder Morgan TransMountain pipeline from Alberta through Burnaby to the Burrard Inlet has seen a lot of resistance.
“The TransMountain pipeline faces a lot of opposition in the Lower Mainland, which is a considerable obstacle. One thing that needs to change to make the possibility of a pipeline more favourable is a change in policy toward climate change. If we put a price on carbon, that would convince a lot of people that we’re on the right trajectory toward climate change and at least make pipelines more socially acceptable.”
Dr. Kathryn Harrison, professor of political science at UBC, says the news means Canada will face even more pressure to improve our relative inaction on climate change.
“Although not a surprise, this announcement is nonetheless huge for Canada. President Obama’s decision to frame the announcement in terms of climate change — rather than threats of pipeline breaks or oil spills which have been more prominent in pipeline debates in this country — challenges Canada in three respects:
Economic: The President of the country that has been Canada’s only real oil importer to date just signalled they don’t want more of Canada’s “dirty oil.” Obama also talked about the need to leave fossil fuels in the ground. Those statements by the U.S., and the possibility that other countries will be following the U.S.’ lead and commit to reduce their own greenhouse gas emissions in Paris, are big warning signals for a country whose economy relies so heavily on fossil fuel exports.
Environmental: Canada’s poor international reputation for decades of inaction, or at least minimal action, on climate change just came home to roost. All eyes will be on P M Trudeau now. What IS Canada’s position going into Paris, and HOW will the new Liberal government achieve greenhouse gas reductions.
Federal-provincial: Mr. Trudeau has said he’ll collaborate with the provinces on climate policy. That will be a big challenge given the big differences in GHG-intensity of the provinces’ economies and of the provinces climate change ambitions to date.
With a new government in both Alberta and Canada, there could be some steady changes on the horizon for Canadians, but Antweiler warns not to get too attached to Obama’s Keystone rejection.
“The U.S. had more to gain from rejecting the project than promoting, but it could be overturned by whoever gets in the White House in 2016. Even [Democratic-candidate] Hilary Clinton might take a more favourable look on it. Companies know that politics change and so they will try to keep the project alive.”
Newly-elected Republican House Speaker Paul Ryan released a statement expressing his unease with the decision, labelling climate change as a special interest”.
“This decision isn’t surprising, but it is sickening. By rejecting this pipeline, the president is rejecting tens of thousands of good-paying jobs. He is rejecting our largest trading partner and energy supplier. He is rejecting the will of the American people and a bipartisan majority of the Congress.”
But many on the Canadian side of the subject take the rejection as a new opportunity to start an era of climate work, regardless of whatever economic consequences that might mean for particularly Western provinces. Harrison’s point of view from a political stance is largely optimistic.
“If Mr. Trudeau wants to take meaningful action to reduce Canada’s GHG emissions, if Mr. Trudeau wants to restore Canada’s environmental reputation on the world stage, President Obama just opened the door wide for him to do that.”