Economy

Obama rejects Keystone pipeline; cites no meaningful boost to economy

President Obama makes three arguments against the Keystone XL pipeline

President Obama rejected the Keystone XL pipeline in a statement on November 6, 2015. Saying the pipeline's role has been 'over-inflated' in past elections, the President explained his reasons for not approving the pipeline range from falling gas
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President Obama rejected the Keystone XL pipeline in a statement on November 6, 2015. Saying the pipeline's role has been 'over-inflated' in past elections, the President explained his reasons for not approving the pipeline range from falling gas

President Barack Obama on Friday rejected the Keystone XL pipeline, moving to bolster his environmental legacy after reviewing for seven years what’s become the nation’s most heated political dispute over climate change, jobs and energy development.

The decision was largely based on international politics, coming less than a month before the president goes to Paris for global climate talks. Obama has been pressing other nations to act on climate change and said approving the pipeline “would have undercut that global leadership.”

Obama has become far more assertive on environmental issues in his second term and the decision will be a key part of his legacy as he prepares to leave office after next year’s presidential election.

His rejection of the pipeline may not mean the long national debate over Keystone is over, though.

TransCanada, the company seeking to build the pipeline, said it is considering reapplying for the presidential permit. The success of a new application would depend on who is in the White House. All the major Republican candidates running for president support Keystone, while Democratic candidates Hillary Clinton and Bernie Sanders oppose the project.

“Today, misplaced symbolism was chosen over merit and science – rhetoric won out over reason,” TransCanada CEO Russ Girling wrote in a statement.

Shipping dirtier crude oil into our country would not increase America’s energy security.

President Barack Obama

Speaking from the Roosevelt Room in the White House, Obama said Friday that he rejected the pipeline after Secretary of State John Kerry told him the State Department review had determined that it was not in the national interest.

“The pipeline would not make a meaningful long-term contribution to our economy,” Obama said. “Shipping dirtier crude oil into our country would not increase America’s energy security.”

Keystone was expected to create thousands of construction jobs, but only about 35 permanent jobs.

Obama’s decision brought an immediate backlash from business groups and Republicans, with GOP presidential candidate Jeb Bush tweeting that “the Obama Admin’s politically motivated rejection of the Keystone XL Pipeline is a self-inflicted attack on the U.S. economy and jobs.”

Obama said the political debate on the merits of the Keystone pipeline had become “overinflated.”

“All of this obscured the fact that this pipeline would neither be a silver bullet for the economy, as was promised by some, nor the express lane to climate disaster proclaimed by others,” he said.

The State Department’s review, which attracted nearly 5 million public comments, concluded that the 800,000-barrel-a-day pipeline would have little impact on greenhouse gas emissions or the economy. State Department officials said the international perception, though, would have been that approving Keystone was inconsistent with U.S. leadership on climate change.

Kerry said the critical factor in his determination that allowing the pipeline was not in the national interest was the consideration that “moving forward with this project would significantly undermine our ability to continue leading the world in combating climate change.”

The pipeline was proposed to run 1,179 miles from the Western Canada oil sands in Alberta to refineries in Texas. Environmental groups seized on government estimates that the Canadian oil results in 17 percent more planet-warming carbon emissions than other sources of oil.

Newly elected Canadian Prime Minister Justin Trudeau expressed disappointment over Obama’s rejection of the pipeline but said the decision would not damage ties between the countries.

“We are disappointed by the decision but respect the right of the United States to make the decision,” he said.

The decision will have little impact on energy markets. The world has changed dramatically in the seven years since the pipeline was first proposed. Skyrocketing U.S. oil production helped create a global supply glut that sent oil prices plummeting, threatening the viability of expensive Canadian oil sands projects and raising questions about the need for the pipeline.

Today, misplaced symbolism was chosen over merit and science – rhetoric won out over reason.

TransCanada CEO Russ Girling

Other pipelines have been approved in the meantime and energy companies, tired of waiting for Keystone to be approved, increasingly have turned to rail as an alternative for shipping oil.

Keystone nevertheless remained a political obsession for Republicans, who used it as an emblem of development, and environmentalists, who made the project a test of resolve on climate change.

Congress this year passed a bill seeking to force Obama to approve the pipeline, but the president vetoed the bill.

“It’s become painfully clear that the president is more interested in appeasing deep-pocketed special interests and extremists than helping tens of thousands of Americans who could have benefited from Keystone’s good jobs,” Senate Majority Leader Mitch McConnell, R-Ky., said Friday.

Expectations that Obama was going to reject the Keystone application grew in recent weeks. TransCanada this week asked the State Department to pause its review of the project – a strategy that could have pushed a decision to the next president. But the Obama administration refused.

Environmental groups were ecstatic when Obama’s announced Friday that he was rejecting Keystone.

“That gives him new stature as an environmental leader, and it eloquently confirms the five years and millions of hours of work that people of every kind put into this fight,” said Bill McKibben, founder of the climate group 350.org.

Sen. Barbara Boxer of California, the top Democrat on the Senate Environment and Public Works Committee, also praised the decision, saying the pipeline “would have brought the filthiest oil known to humankind into our country in large amounts.”

Obama’s decision represents a singular moment for the nation’s environmental movement, as what began as a fringe effort to stop a little-known project seized the international stage.

The Obama administration took seven years to decide on Keystone. The timing of Friday’s announcement is significant, both because of upcoming climate talks in Paris and the political cover offered by low gasoline prices.

While the State Department concluded Keystone would not impact gasoline prices, the public might be less forgiving of a president who blocks a high-profile energy project at the same time drivers suffered at the pump.

“Today, we’re continuing to lead by example,” Obama said, announcing his decision to reject the project, “because ultimately, if we’re gonna prevent large parts of this Earth from becoming not only inhospitable but uninhabitable in our lifetimes, we’re going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky.”

Sean Cockerham: 202-383-6016, @seancockerham

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