Eun-Hee Kim is an assistant professor of strategic management and public policy.
It’s been seven years since TransCanada, a builder and operator of the energy infrastructure based in Calgary, Alberta, filed its Keystone pipeline permit application to the U.S. State Department. The proposed pipeline would have delivered oil produced from oil sands in Alberta cross-border to Nebraska.
After a series of delays, last week President Obama announced that he had rejected the pipeline permit application.
This is great news for all those who support strong measures to combat climate change (including Pope Francis, who was just here.) With the exception of the Clean Power Plan that President Obama and the Environmental Protection Agency announced in August, the Obama administration has been somewhat lackluster on the environmental policy front in the past several years. This move will certainly bolster President Obama’s image and help build his legacy in this regard.
Should we have anticipated the rejection? Not necessarily. This outcome came amid the unfolding developments in the field in addition to continuous opposition by environmental and community advocates. Most of all, as EPA pointed out, oil prices have fallen sharply recently, lessening the need to build additional pipelines (there already exist substitutes for pipelines such as railroads) and weakening business interest in oil sands.
Reviews by the U.S. State Department also suggested that building the Keystone pipeline would not influence the unemployment rate significantly. Besides, Canada’s new prime minister, unlike his predecessor, doesn’t seem to feel strongly that the Keystone pipeline permit is the most important issue in the U.S.‒Canada relationship.
Does the rejection mean no forever to cross-border transportation of oil produced from oil sands in Alberta? It means no now, but we may see this issue come up again in the future – especially in a new Republican era.
Recently, TransCanada asked for suspension of its application in anticipation of a possible rejection by President Obama and a possible regime change in upcoming presidential election in 2016.
With changes in the political and economic environments that make extracting oil from oil sands favorable, the Keystone pipeline debate could certainly surface again.