Keystone XL's true effect on emissions is Obama's main issue

CONKLIN, Canada — Can the Keystone XL pipeline be built without significantly worsening greenhouse gas emissions and climate change? For President Obama, that is the main criterion for granting a federal permit to allow the pipeline to cross from southern Alberta into the United States.

Canadian authorities and the oil industry say measures already in place or under consideration to cut greenhouse gases ensure that Keystone XL can pass that test.

"We absolutely think we can maintain growth in oil and gas, and achieve greenhouse gas reductions," said Nicole Spears, a climate policy expert with Alberta's Ministry of Environment and Sustainable Resource Development.

Yet the most compelling counterpoint comes from another government agency, Environment Canada, which is responsible for monitoring greenhouse gas trends. An October report by the agency forecast sharp, sustained growth through 2020 in carbon dioxide emissions from the exploitation of oil sands. By that year, nearly all of Canada's emissions increase will be due to oil sands extraction, the report says.

Stewart Elgie, professor of law and economics at the University of Ottawa, questions whether the oil sands companies can reduce emissions substantially. "The biggest issue for them is greenhouse gases, and they have to do better," he said.

Two years ago, the Obama administration's approval of a permit for the $7-billion Keystone XL project, which would carry oil from Alberta to the Gulf of Mexico, appeared all but certain. Now, after problems with environmental impact statements and relentless opposition by environmentalists and major Democratic donors, the pipeline's fate appears in doubt.

"I think at the end of the day he will say no, but there will be some twists and turns before we get there," said Carol Browner, Obama's former chief climate change advisor.

At the same time, Canadian Prime Minister Stephen Harper has driven home how crucial the pipeline is to his country, telling executives in New York recently that he "would not take no for an answer."

Canadian authorities and the oil industry have answered Obama's challenge by pointing to their success in limiting greenhouse gas emissions. Canada accounts for only 2% of the world's output. Unlike any U.S. state, Alberta, Canada's oil hub, has a tax on its biggest carbon emitters.

Canada has curtailed heat-trapping carbon dioxide from power plants and vehicles. Now, after years of delay, federal rules for oil and gas could be proposed by the end of the year, Spears said, which would signal to the White House further steps Canada might take to rein in greenhouse gases.

Canada's ambassador to the United States, Gary Doer, said environmentalists are undermining their goal of reducing emissions by seeking to force oil companies to move their product by rail. "There are unintended consequences," he said. "With rail, those are higher costs than a pipeline, greater risks amid higher greenhouse gases."

A recent analysis in the journal Energy Policy comparing emissions from diesel-powered rail and pipelines found that pipeline emissions varied depending on the line's length and the fuel used to generate the electricity to run it. But the study also concluded that transporting the oil to the gulf by rail rather than pipeline would release a third less greenhouse gases.

In any case, the Keystone XL pipeline itself would not generate a great deal of emissions. Rather, it would encourage further expansion of oil sands extraction, which generates more carbon dioxide than conventional oil drilling.

Oil sands deposits are a mixture of clay, sand, rock and a tarry fossil fuel called bitumen, which can be hard as a hockey puck. About one-fifth of Alberta's bitumen deposits can be strip-mined. The rest of the tarry fuel is deeper and would be tapped through a process called in-situ recovery, which entails injecting superheated steam underground to soften the bitumen and draw it to the surface through an oil well.

Both methods require burning fossil fuels that emit carbon dioxide.

Industry officials said that for financial and environmental reasons, oil companies are pushing to cut emissions and have formed an alliance to develop new methods to deal with environmental challenges.

Amid the woods and marshland of eastern Alberta is a 13-year-old in-situ oil sands operation called Christina Lake, a complex of low buildings, tall tanks and wells, all connected by pipelines carrying steam and melted bitumen.

At Christina Lake, jointly owned by ConocoPhillips and Canada's Cenovus, the goal is to get more bitumen with less steam, which means using less natural gas. "The best thing for my bottom line is to improve my steam-to-oil ratio and reduce greenhouse gas emissions," said Al Reid, Cenovus senior vice president for Christina Lake.

Developing Alberta's oil sands is a central pillar of the Canadian economy. But the country's ambitious energy agenda has begun to thwart efforts to keep greenhouse gas emissions from skyrocketing.

Canada hopes to more than double its production of oil sands petroleum by 2030. Keystone XL would play a major role, shipping up to 830,000 barrels of petroleum daily.

In October, Spears conceded that "Alberta is not on track" to meet its greenhouse gas emission targets. In November, the Canadian Assn. of Petroleum Producers reported that emissions in absolute terms and per barrel of oil produced were on the rise "due primarily to increased oil sands production."

The Alberta carbon tax, groundbreaking when introduced in 2007, is now too low to compel industry to make deep cuts in emissions, according to Elgie, the University of Ottawa professor, and other analysts. As a result, Canada probably will fail to meet the goals it took on, with the United States, at climate talks in 2009.

The oil industry and the Alberta government say new technology being tested to capture and store carbon dioxide could help bring down emissions. A sharp increase in the Alberta carbon tax could also nudge industry to find better ways to cut emissions, analysts said.

But critics of Keystone XL question whether carbon emissions could fall, in light of Canada's goal of relentlessly accelerating oil sands production.

"How can you improve things when you reduce greenhouse gas emissions 10% a barrel, but you triple production?" said Simon Dyer, policy director with the Pembina Institute, a Canadian environmental group. "To meet international climate obligations and to respect the regional environment and communities, we think it's inappropriate to be expanding oil sands at the current rate."

neela.banerjee@latimes.com

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