Experts from the Stockholm Environment Institute argue the social costs of fossil fuels are underestimated
Global demand for energy continues to grow, and despite rapid growth in renewable technologies, it is fossil fuels that still dominate the market.
And even as world leaders express dire concern about climate change, large and small countries alike, and multinational corporations, continue to pump trillions of dollars into fossil-fuel production and commerce: coal mine expansions, new coal and gas export terminals, and major oil sands and heavy oil extraction facilities.
All of these investments will increase global fossil-fuel supplies – and almost certainly, fossil-fuel consumption and resulting greenhouse gas emissions.
But by how much? Is anyone keeping track?
Since last summer, we have been examining the social and environmental implications of major fossil-fuel infrastructure investments around the world, aiming to provide timely, science-based analysis to help policy-makers and citizens understand these complex issues.
A great deal is at stake: the intensity of global climate change, many countries’ development trajectory, the future of financial systems that are deeply invested in energy resources we can’t afford to burn.
It’s easy to see the big picture, but fossil-fuel investment choices aren’t usually made on a global scale.
They’re made in individual countries and regions, often amid promises of large-scale development, job opportunities, and economic transformation. Without better alternatives, saying no can be very difficult.
More jobs – at what price?
That’s why the debate about the proposed extension of the Keystone XL pipeline, to connect Canadian oil sands production with refineries and ports in the Gulf of Mexico, is so important.
Yes, it will create jobs, and yes, it would be a boon to Alberta’s economy – but at an unacceptable cost, many environmental groups have argued.
President Barack Obama agreed that Keystone XL’s climate impact should be decisive, saying he would only approve it if it “does not significantly exacerbate the problem of carbon pollution”.
The answer is much-debated.
A draft analysis commissioned by the U.S. Department of State found that the pipeline would lead to little change in global GHG emissions, while others have argued that all the emissions associated with oil to be transported by the pipeline should be counted: at full capacity, 830,000 barrels per day, that would be 181 million tons of carbon dioxide equivalent (CO2e) per year.
Some have focused on the high resource-intensity of oil sands production, and argued that if Canadian oil sands substitute for less resource-intensive sources of oil, that alone would increase emissions by 19 to 25 million tons CO2e per year.
Global oil prospects
A key question underlying these different estimates is how Keystone XL would affect the amount of Canadian oil sands production that could reach the market, and whether that oil would displace existing supplies, or add to them.
Given the many factors at play, these are highly speculative questions. Some have argued that if the pipeline is not built, rail and other options will be used to transport the oil.
But there is far more prospective added Canadian oil sands production (4.5 million barrels per day) than Keystone XL itself can carry, so rail transport may be used either way.
And advocates for the pipeline certainly do argue that it will boost production.
What if Keystone XL does increase the global oil supply? That, our analysis suggests, could have a far greater impact on GHG emissions than the resource-intensity of production alone.
To capture a range of possibilities, we examined three scenarios if the Keystone permit were rejected: 1) that the same amount of oil (100% of Keystone capacity) would reach the market anyway through other transport options; 2) that half of it would; or 3) that none would.
For the latter two cases, we found that the pipeline’s impact on global oil prices, though modest (less than 1%), would have a measurable impact on global oil demand – increasing oil use by as much as 510,000 barrels per day, or 62% of Keystone XL capacity, in the case that none of the oil would otherwise reach the market.
Such an increase would boost global GHG emissions by as much as 100 million tCO2e per year, potentially for most of Keystone XL’s 50-year lifespan. If only half of the oil would otherwise reach the market, the impact would be roughly half that size.
For perspective, 100 million tCO2e per year would be roughly equivalent to 1–2% of current U.S. emissions and 10% of the emission reductions that the U.S. government has pledged to achieve by 2020 (to 17% below 2005 levels).
It would also be greater than the emission reductions that several proposed federal climate mitigation policies could achieve in 2020, such as U.S. Environmental Protection Agency performance standards on industrial boilers, cement kilns, and petroleum refineries.
It is hard to know which of those scenarios is most plausible, but if a simple supply-and-demand model shows such stark results, clearly these questions need to get more attention – and more transparent treatment – in the State Department’s analysis.
We also need to remember that Keystone XL is only one of numerous fossil-fuel infrastructure projects being considered, or under development, around the world.
Environmental activists have made Keystone XL a cause célèbre, but many lower-profile investments could have equally big effects.
Peter Erickson is a senior scientist at the Stockholm Environment Institute’s U.S. Center, in Seattle. Marion Davies is communications manager for SEI’s US Center and Reducing Climate Risk theme.