Economic analysis

New language, same old story on Keystone from climate scientists

If you want to be on the side of evidence-based policies on climate change, you shouldn’t rely on exaggerations when writing about Keystone

Jeff McIntosh/CP

Jeff McIntosh/CP

This piece, published in the Guardian by Pennsylvania State University climate scientist Michael Mann, takes on the Keystone XL pipeline with exaggeration rather than evidence. The article continues a disturbing trend among some of our most prominent climate scientists who continue to equate Keystone XL with the extraction of hundreds of times more oil than it will ever likely transport and with more oil than will likely ever be extracted from the oil sands. The article ignores important market realities with respect to how pipelines interact with production decisions. If we’re going to have a conversation about greenhouse gas impacts of a pipeline, let’s have them on an honest footing. If you want to be on the side of evidence-based policies on climate change, you shouldn’t rely on exaggerations when writing about it.

Mann claims that, “even the very conservative estimate of my climate scientist colleague Andrew Weaver is dire: extracting and burning all the Keystone-targeted oil would likely result in approximately 0.4°C of additional warming.” Keystone-targeted oil, in this case, is Mann’s new way of referring to the entire oil sands resource—it would take the Keystone XL pipeline 10,000 years to transport that much oil.

10,000 years? Really? Yes. When Andrew Weaver and Neil Swart, estimated the emissions impacts of extraction and combustion of the oil sands resource, they used a figure of approximately 2 trillion barrels of original oil in place—a defensible number for oil in place, but not for expected future production, and certainly not for Keystone-targeted oil (a distinction about which the Swart and Weaver piece is very clear). At a capacity of 830,000 barrels per day, Keystone XL would be expected to transport about 200 million barrels of oil sands bitumen and about 100 million barrels of diluent (usually a natural gas liquid) each year, assuming 30 per cent dilution. At those rates, it would take about 10,000 years for the Keystone XL pipeline to transport the amount of oil sands bitumen associated with the Swart and Weaver 0.4°C estimate. Furthermore, given current prices and technology, only about 10 per cent of that total resource is economically viable and, while technology may improve and prices may increase, much of it is unlikely to ever be produced.

Mann goes on to say that the calculated impact of oil sands on climate change, in the context of emissions to date and an arbitrary free pass given to most conventional oil, was why James Hansen had, “characterized approval of the pipeline as tantamount to game over for the climate.” The greenhouse gas emissions associated with the oil sands bitumen shipped via Keystone XL, using life cycle emissions data, would likely amount to about 180 million tonnes of CO2 per year, assuming no improvements in emissions-intensity and that all the capacity is used to transport oil sands in situ-produced diluted bitumen to full conversion refineries. That may seem like a lot, and it is, but it’s not game over by any means—context matters.

In the International Energy Agency’s 450ppm scenario, an estimate of the impact of a set of policies designed to provide reasonable odds of keeping climate change below dangerous thresholds, annual emissions in 2035 are estimated at over 21,000 million tonnes. In other words, even in a world where we take serious global action on climate change, the total emissions associated with all the oil transported by Keystone XL are unlikely to exceed one per cent of global emissions. Game over? Hardly.

Mann doubles down in the next paragraph stating that, with Keystone XL in place, keeping climate change in check would require, “a moratorium on all other sources of fossil fuel energy, no more natural gas extraction, and no more oil drilling,” and argues that Keystone XL is by no means marginal. Looking again at the International Energy Agency’s analysis, in the 450ppm scenario, global oil production is projected at 76 million barrels per day in 2035. So Keystone XL would transport a little over one per cent of the oil projected to be consumed in a scenario consistent with keeping climate change below 2°C. Even if we restrict our attention to unconventional oil, Keystone XL would still transport less than 10 per cent of the International Energy Agency’s projection of global use of unconventional oil under stringent global climate change policy. Keystone XL is, based on evidence, the very essence of the commonly used definition of marginal.

The International Energy Agency’s 450ppm scenario also makes clear that climate stabilization is not an either/or proposition between Keystone XL and other natural gas and oil extraction—it’s orders of magnitude away from that. The 450ppm scenario predicts an increase in natural gas production globally between now and 2035, albeit not as rapid an increase as would happen in the absence of climate policies. It even predicts continued extraction of coal, but substantially less of it by 2035 than we see today. There is simply no evidence to support Mann’s contention that a world with Keystone XL would require significantly more stringent global climate policies than a world with it, all else equal.

Professor Mann should also re-consider his statement that Keystone XL will “lock-in decades of extraction of dirty, expensive fossil fuels.” Pipeline tolls are a significant but still relatively small—perhaps as high as 10 per cent—share of the total cost of a barrel of refined petroleum products, and pipelines are the lowest cost means to transport oil over long distances. As a result, it’s possible to imagine a case where some oil sands projects continue to produce only because a pipeline exists, but that scenario requires a particular combination of prices, investments, and pipeline construction. Contrary to Professor Mann’s contention, I believe it’s easier to imagine a scenario where too many pipelines, built on overly bullish oil sands growth forecasts, accelerate the decline of oil sands. In fact, you don’t have to look too far back in history to see oil sands producers worried about an overbuild of pipeline capacity.

Wait, how would more pipelines lead to a more rapid decline? To understand this, you need to keep in mind that pipeline tolls amortize the capital cost of the line and pass through operating costs through the tolls applied to barrels transported on the line. Now, suppose that market conditions such as the imposition of stringent climate policy lead to reduce production relative to what was forecast. What happens? Pipelines operate below capacity and so tolls increase. As tolls increase, pressure increases on projects already affected by the weak market, and production decreases further, causing a further increase in tolls, and so on. Should Professor Mann wish to see an example of this in action, he should look at Western Canadian natural gas pipelines, where decreasing production in response to a change in market conditions led to skyrocketing tolls on the TransCanada mainline which in turn put greater pressure on gas producers and so on. That downward spiral of pipeline capacity utilization is, in part, why re-purposing TransCanada’s natural gas mainline to oil as part of the Energy East project is feasible.

When I raised these points on Twitter, Mann’s fellow climate scientist Scott Mandia told me that I was missing the broader point. To me, the broader point has always been that if we are to combat climate change effectively, we need evidence-based policy. That means that those with the influence to move policy such as Professors Mann and Hansen need to be on the side of evidence, not exaggeration. Articles such as the one Professor Mann published this week place him on the wrong side.