Join a live discussion about Keystone with Jeffrey Simpson at 12 ET here.
A year ago, with an election in the offing, Stephen Harper's government nixed BHP Billiton's bid for Potash Corp. of Saskatchewan. Public opinion had turned against the Australian giant's offer in the wake of Saskatchewan Premier Brad Wall's objections. The Harperites, reading the political mood and fearful of losing seats, swallowed their free-enterprise ideology and blocked the takeover.
So it's a bit rich to listen to certain voices in the Harper government and among the chorus of lobbyists for the $7-billion Keystone XL pipeline decrying the Obama administration's 11th-hour decision to further study the route through Nebraska. All politics, they claim, and thus all bad.
Of course, the delay was about Barack Obama's precarious relationship with part of his party's base. Environmentalists are disappointed in the President's timid policies; postponing a decision on Keystone might assuage their disappointment.
But there was more to the decision than just Democratic presidential politics. Nebraska's Republican Governor didn't like the pipeline route, nor did many state legislators, to say nothing of a chunk of Nebraskans. The state's politicians and voters were acting, if you like, as did the people of Saskatchewan in the Potash Corp. affair. A whole lot of them said: Whoa there. And the President listened.
The narrow point at issue – the one the White House used to justify the delay – is the proposed routing through an environmentally sensitive part of Nebraska. On Tuesday, the state's two federal senators and the Governor said they would support Keystone if the pipeline went through another part of the state. Whether that support means approval before the next presidential election remains to be seen.
Whatever happens, Keystone hasn't turned out to be a "slam dunk," as Mr. Harper suggested – just as the BHP bid that looked so promising at the start died a political death at the Prime Minister's hands.
But there are broader lessons from the Keystone affair that the Canadian and Alberta governments, and the oil industry, appear to have ignored.
For starters, this talk about finding markets in Asia for tar sands oil if the Americans reject Keystone is just a bluff. The Northern Gateway project to take tar sands oil to the B.C. coast and then to Asia is dead before the environmental hearings even begin.
The route must traverse huge tracts of land claimed by aboriginals who, for a variety of reasons, don't want a pipeline. Maybe they're pigheaded. Maybe they don't want to join modernity. Maybe they'll change their minds. Quite probably, however, they won't, and the great dream of a new route to Asia for the tar-sands oil will go the way of two failed efforts to bring natural gas down the Mackenzie Valley.
So what about pipelines to other places in the United States? This option will undoubtedly be explored should Keystone fail. But does anyone who's witnessed the furor around Keystone expect something different with other pipelines?
There are three levels of trouble for tar-sands oil. The first, as we have seen in Nebraska, is very local. The second is that tar-sands oil is dirtier than conventional oil in the sense of emitting more greenhouse gas-causing carbon emissions. The third is that some people simply object to developing and using more fossil fuels from whatever source and, unfortunately, the tar sands, at least the mining projects, are awful to look at.
There's not much the tar-sands folks and their lobbyists can do about opponents who don't want any more fossil fuel to be used, anywhere, any time, any how. But they could do something about lowering emissions from the tar sands.
The industry has made progress in reducing the greenhouse-gas emissions per unit of production. The trouble is, these intensity reductions aren't enough. If the total volume of production rises, then the greenhouse-gas emissions will rise, too, albeit at a slower rate than if intensity improvement had not occurred. The Royal Society of Canada has said that steps taken thus far remain "inadequate for Canada to meet its economy-wide GHG emissions target."
Tar-sands oil is being harried by the European Union, which is considering labelling such oil as highly polluting. And it's being criticized in the United States. The bother won't stop until governments and the industry draw broader lessons from the Keystone setback.