Senate Keystone hearing called 'fact-free debate'

Published March 13, 2014 10:30 pm

Big Oil • Divide over the Keystone pipeline deepens in Senate hearing.
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WAashington • The fight over Keystone XL moved to the Senate on Thursday, as fans and foes of the pipeline battled over its link to climate change, the economy and U.S. security.

But little was resolved during a two-hour Senate Foreign Relations Committee hearing on the issue that only served to underscore the sharp divisions over TransCanada Corp.'s $5.4 billion project.

University of Alberta energy policy professor Andrew Leach described it as a "largely fact-free debate."

"Both sides (are) peddling complete falsehoods," Leach observed, even as they are "calling for people to base their decisions on the facts."

Debates erupted about humanity's link to climate change — with Karen Harbert from the Chamber of Commerce dodging a question about whether human activity contributed to the phenomenon. And Sen. Ron Johnson, R-Wis., ended a tense exchange with former NASA climate scientist James Hansen by asserting that "the science is far from settled."

Senators also struggled with the final destination of diluted bitumen and Bakken crude that would flow through the pipeline linking Alberta with the Cushing oil hub and, ultimately, giving it passage to Gulf Coast refineries.

The gasoline, diesel and other products produced from refining the Canadian crude could easily be sold to customers around the globe. But there are greater restrictions to exporting both American oil — which is widely banned — and foreign-origin crude, which requires Commerce Department approval.

Sen. Ed Markey, D-Mass., said he was introducing a bill to bar oil carried by the pipeline from being exported. He sponsored similar legislation while in the House.

The State Department is currently weighing whether Keystone XL is in the national interest, a determination that wraps in economic, environmental and security concerns.

Hansen, the climate scientist whose concerns about Keystone XL unlocking Alberta's oil sands helped spur the environmental community's fight against the project, used the hearing to make the case for a tax on carbon. He called it a "conservative solution" to the climate challenge, unlike more complicated "cap and trade" proposals that would impose limits on carbon emissions as well as systems for exchanging credits to emit the greenhouse gas.

"Fossil fuels appear to the consumer to be the cheapest energy" because health and climate costs aren't factored in, Hansen said. But a carbon tax would "make us honest" by adding those costs normally borne by the public "to the fossil fuels where they belong."

Harbert, president of the Chamber's Institute for 21st Century Energy, argued that the pipeline would mean jobs and a stable supply of oil from a North American ally — and would translate into fewer carbon emissions than alternative modes of transporting the Canadian crude. "If you are in support of the environment, you are in support of the pipeline," she said — earning a rebuke from Sen. Barbara Boxer, D-Calif.

President Barack Obama's former national security adviser, retired Marine Corps Gen. James Jones, stressed that the United States would strengthen its hand internationally by approving Keystone XL.

More philosophically, he said, the United States' international strength and even the fortunes of low-carbon power sources being developed in America depend on the country's energy security.

"The decision on the pipeline is a litmus test of whether America is serious about national, regional, and global energy security, and the world is watching," said Jones, who also has represented the oil industry since leaving the White House. "If we want to gain an important measure of national energy security, jobs, tax revenue, and prosperity to advance our work on the spectrum of energy solutions that don't rely on carbon, it should be approved."

On the sidelines of the hearing, representatives from National Nurses United said the U.S. should only approve Keystone XL if it will not hurt the health and safety of the American people, a move that builds on earlier attempts to move the pipeline debate beyond strictly environmental concerns.

California billionaire activist Tom Steyer also released an analysis by the London-based not-for-profit think tank Carbon Tracker Initiative finding that Keystone XL is essential to unlocking a large volume of Alberta's oil sands. That bucks the State Department's conclusion in January that the project is unlikely to make a significant difference in the amount of bitumen harvested from Canada's oil sands, given rail and other alternatives for getting that hydrocarbon to market.

But the pipeline would be a cheaper option —something that is not in dispute —and that is enough to make the difference in profitability and activity in Alberta, Steyer stressed.

"You're changing the economics by allowing the pipeline, and when you change the economics, you change the number of barrels in place that move into crude barrels," Steyer said. "Virtually 100 percent of what can be carried by Keystone XL would now be profitable, so you actually increase the size of the producible reserve."

The latest report adds to thousands upon thousands of pages of analysis that have been produced by interest groups, researchers and the government since TransCanada first asked the State Department for approval to build Keystone XL in 2008.

"It's not about the pipeline," said Sen. Tim Kaine, D-Va. "Pipelines are fine. It's really about tar sands oil and where tar sands oil is in the continuum of energy sources from high carbon (to) no carbon."