This article was written by Janice Dickson and Adrian Morrow, and was published in the Globe & Mail on January 18, 2021.
U.S. president-elect Joe Biden plans to cancel the Keystone XL pipeline expansion as one of his first acts in office, transition documents suggest, dealing a blow to Canadian efforts to get the project built and jeopardizing the prospect of thousands of jobs in Alberta.
Rescinding the Keystone XL pipeline is included as an executive order on a to-do list, according to The Canadian Press, which has viewed the documents. Outgoing President Donald Trump in 2017 signed the construction permit, which will now likely be terminated.
“Roll back Trump enviro actions via EO (including rescind Keystone XL pipeline permit),” the document reads. Other entries under the “Climate” heading include, “Rejoin the Paris Agreement” and “Announce date for U.S.-hosted Leaders’ Climate Summit.”
TC Energy Corp.’s 830,000 barrel-a-day Keystone project was approved by Canadian regulators in 2010 but blocked in 2015 by then-U.S. president Barack Obama.
He heeded the advice at the time from the U.S. Environmental Protection Agency and environmentalists.
The US$11.5-billion pipeline would carry Alberta oil to U.S. Midwest refineries.
The company issued a statement Sunday that didn’t acknowledge reports that the project might be cancelled, but instead announced a new sustainable initiative for the pipeline.
TC Energy said it will achieve net-zero emissions across project operations when it is placed into service in 2023.
It also said the pipeline will be fully powered by renewable energy sources no later than 2030.
After Mr. Biden was elected, the Liberal government said making the case to Mr. Biden to proceed with the project was a top priority.
Prime Minister Justin Trudeau raised the issue with Mr. Biden in their first phone call on Nov. 9.
The Prime Minister’s Office would not comment Sunday on reports that the project would be cancelled.
Though his move is being met with swift criticism in Canada, Mr. Biden has been clear in his opposition to the pipeline expansion. He has promised a clean-energy revolution and won the presidency with support from Democrats who want strong action on climate change.
Mr. Biden’s campaign said in May that he would axe Keystone XL by revoking its permit on the first day of his presidency. “Denial of science ends on Day 1 of a Biden presidency,” his policy director, Stef Feldman, said in a statement in May.
“Biden strongly opposed the Keystone pipeline in the last administration, stood alongside President Obama …to reject it in 2015, and will proudly stand in the Roosevelt Room again as president and stop it for good by rescinding the Keystone XL pipeline permit.”
In an interview with CNBC, Mr. Biden repeated the pledge. “I’ve been against Keystone from the beginning. It is tar sands that we don’t need, that in fact is a very, very high pollutant,” he said.
The Canadian government on Sunday night still appeared to hold out hope that Mr. Biden wouldn’t follow through on his promise to cancel the pipeline.
“The Government of Canada continues to support the Keystone XL project and the benefits that it will bring to both Canada and the United States,” ambassador to the U.S. Kirsten Hillman said in a statement. “My team and I will continue to work with Alberta and the industry to make sure American lawmakers and stakeholders understand the facts about energy production in Canada, and that KXL will strengthen U.S. energy security safely, sustainably and responsibly.”
Conservative Leader Erin O’Toole said this move will “devastate thousands of Canadian families who have already been badly hurt by the economic crisis.”
Mr. O’Toole called Keystone XL a project of national significance that supports workers in both countries. He called on the Prime Minister to immediately reach out to the incoming administration to stop this from happening.
Alberta Premier Jason Kenney said in a statement Sunday that he is “deeply concerned” that Mr. Biden may repeal the permit.
“Doing so would kill jobs on both sides of the border, weaken the critically important Canada-U.S. relationship, and undermine U.S. national security by making the United States more dependent on OPEC oil imports in the future,” Mr. Kenney said.
The Alberta Premier said should the Biden administration repeal the Keystone-XL permit, Alberta will work with TC Energy to use all legal avenues available to protect its interest in the project.
The pipeline is key to the Alberta government’s strategic goal of easing the differential, or discount, on Alberta oil. Many U.S. refineries rely on Canada’s heavy oil for feedstock, and about 80 per cent of all oil produced in Canada is exported to the United States.
But if constructed, the pipeline would add capacity and provide a faster, more efficient link between Alberta and the massive U.S. Gulf Coast refinery network – something the province hopes would allow it to net much better prices for each barrel of oil.
The financially strapped Alberta government also has a direct interest – it is a part owner of the TC Energy pipeline, with a $1.5-billion ownership stake and a contractual commitment to $6billion more in loan guarantees. This week, Alberta Energy said the terms of the loan guarantee became effective on Jan. 4. This means that the Alberta Petroleum Marketing Commission, a Crown corporation, is now obliged to guarantee new project construction debt for the pipeline.
Alberta is spending $1.1-million to lobby U.S. lawmakers and launch public campaigns in support of energy trade between the two countries, including the Keystone XL pipeline. Alberta signed contracts with three prominent Washington lobbying companies late last year to bolster its team to push the province’s economic interests.
Alberta NDP Leader Rachel Notley said the risk around the project has been “obvious for some time,” criticizing Mr. Kenney for jeopardizing up to $7.5billion of Alberta taxpayer’s money on a project that might be stopped.
“While there’s no question that the successful completion of KXL can be beneficial to Alberta’s economy, the Premier has never come clean on the economic and risk analysis associated with his massive gamble,” she said.
Environmental groups, Indigenous communities and landowners have pushed the incoming president to cancel the permit. Mr. Biden’s cabinet nominees include Deb Haaland, the prominent Native American congresswoman who joined protests against the Dakota Access pipeline in 2016, and former Michigan governor Jennifer Granholm, a renewable-energy advocate.
Green Party Leader Annamie Paul said the U.S. plan to scrap the pipeline permit is “what true climate leadership looks like.” “No smoke ‘n mirrors like you see with Justin Trudeau’s Liberals.”