Keystone, Activism, and Pure Cap-and-Dividend

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Environmental activists have made stopping the expansion of TransCanada’s Keystone pipeline a top priority.  Keystone XL, the expansion project, would transport Canadian tar sands oil to markets in the United States and beyond.  (A proposed southern addition to the pipeline would carry oil to the Gulf of Mexico, facilitating further transport by oil tanker.)  The pipeline means more bad news for the environment.  It represents a big investment in continued fossil fuel use and the oil produced from tar sands is especially bad for the climate.  The National Resources Defense Council estimates that producing synthetic oil from tar sands results in three times as much greenhouse gas emissions as does producing conventional crude oil.

Keystone XL serves as a potent symbol for environmental opposition.  Greenhouse gases are literally invisible.  The real effects of climate change can always be debated and turned into statistics.  A big ugly pipeline, 36-inches in diameter and hundreds of miles long, on the other hand, well, that makes the issue tangible.

Because the expanded pipeline would cross international borders, a presidential permit is required, placing President Obama at the center of the controversy over the pipelines construction.   (An interesting article on the law of presidential permits can be found here.)  In early 2012, the president denied TransCanada’s first permit application after Republicans forced him to make a decision by February 21, 2012.  (Republicans achieved this by including the deadline provision within a payroll tax cut bill the president favored.)  (John M. Broder and Dan Frosch, “Rejecting Pipeline Proposal, Obama Blames Congress,” The New York Times, Jan 18, 2012)  Rejecting the application, the president blamed “the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people.”

The president’s 2012 decision did not preclude later approval of the project and Transcanada subsequently submitted a new application, which remains under review by the administration.  The Environmental Protection Agency’s April 22, 2013 letter to the State Department reflects an ongoing debate on the matter within the administration and if the president has made a final decision on Keystone, he has kept it a tight secret.

As a result, environmentalists are pressuring the president to reject the pipeline.  In February, environmental groups brought tens of thousands of marchers to Washington, D.C. urging the president to move “Forward on Climate” and to reject the Keystone pipeline.  And, according to 350.org, during the comment period for the State Department’s environmental review of Keystone, environmental groups collected over 1 million comments opposing the pipeline.  Today, activists are urging citizens to sign the “Keystone XL Pledge of Resistance” and thereby pledge to engage in civil disobedience against Keystone XL should the administration indicate its approval of the pipeline expansion.

I applaud environmentalists opposing Keystone XL and urging the president to reject the pipeline expansion.  I do not suggest anyone let up on these efforts.  But I also believe that if we want meaningful progress on climate change, we need to take a somewhat wider view of things in two respects.

First, while pressure on President Obama to reject Keystone XL is important, it is also critical to help clear the way for him to do so.  I grew up in Wisconsin and I know that if you have a car lodged in a snow bank, sometimes pushing against the car isn’t enough.  You also need to dig some of the snow out from under the tires so the car faces less resistance.  Then when you push, you get results.

The president “gets it” on climate change.  He spoke boldly of the need to address the issue in his second inaugural address.  And the administration has matched its words with actions, for example by aggressively raising fuel efficiency standards for cars and light trucks.  The EPA has moved to regulate carbon dioxide emissions from power plants under the Clean Air Act.

But the president faces a House of Representatives hostile to climate change science.  House Speaker Boehner’s comments to USA Today last November reflect this view:

“I don’t think there’s any doubt that we’ve had climate change over the last 100 years. What has initiated it, though, has sparked a debate that’s gone on now for the last 10 years.  I don’t think we’re any closer to the answer than we were 10 years ago.”

Indeed, the House passed legislation that would take the decision about Keystone away from the president, bypassing the presidential review process.  Even the Democratically controlled Senate voted 62-37 to pass an amendment expressing approval of the pipeline, with 17 Democrats voting for it.  Ouch.  Yes, the president can block Keystone XL without congressional approval, but the decision would be easier if the political headwinds were not so severe.

Enter Organizing for Action, the issue advocacy group that sprang out of the Obama campaign and is dedicated to advancing the president’s agenda.  OFA is working to call out elected officials who turn their backs on climate science.  Doing so should make it easier for the president to reject the Keystone XL permit application.  Moreover, the effort will increase the chances for comprehensive legislation to address climate change in the future.  The president backs cap-and-trade legislation but knows it cannot get through a hostile Congress.  Given these circumstances, I hope that everyone opposed to Keystone XL will help to clear the way for President Obama to reject the permit application – and otherwise fight climate change – by taking on those who turn their backs on climate science.  In that way, we will clear the snow out from under the car tires and roll the vehicle forward.  (It will be a hydrogen fuel cell vehicle using hydrogen produced using renewable energy, of course.)

Second, we need to start talking about a comprehensive solution to climate change.  Stopping Keystone XL won’t solve the climate crisis.  I’m not knocking the effort to block the pipeline.  Opposition to Keystone XL helps advance the environmental movement and propel us toward a real solution.  You see, we will never halt climate change simply by protesting each pipeline or fossil fuel-fired power plant around the world, but such activism helps to change the hearts and minds of citizens.  We must change the way we, as a society, think about the relationship between our economic system and our planet.  Once we do that, we can adopt a comprehensive solution.  The real prize is long-term congressional and international action on climate.  Right now, we aren’t even close.  Have we already forgotten the debacle that results from a lack of broad-based support for comprehensive reform?  The death of the American Clean Energy and Security Act (aka Waxman-Markey), which narrowly passed the House in 2009 but was never taken up by the Senate, should serve as a reminder.

Today, our economic system does not put a price on greenhouse gas emissions.  Companies are free to generate and release greenhouse gases without consequence.  The system makes as much sense as allowing trash collectors to dump garbage anywhere they want.  Sure, trash collection would be inexpensive in the short run, but we would be left with an environmental disaster.  Sound familiar?

If we adopted Pure Cap-and-Dividend, a comprehensive solution to climate change, businesses like TransCanada would make decisions that are more environmentally and economically rational in the first place.  (Read about Pure Cap-and-Dividend, and how it differs from more limited cap-and-trade proposals, here.)  A Pure Cap-and-Dividend program would include caps on greenhouse gas emissions (which caps would drop every year) and require companies to purchase the right to emit greenhouse gases.  Producing oil from tar sands requires more energy and thus, results in more greenhouse gas emissions than does traditional oil production.  Therefore, under a Pure Cap-and-Dividend system, producers of tar sands oil would need to purchase more emissions permits than producers of traditional oil – this would make tar sands oil significantly more expensive than traditional oil.  (Better yet, all oil would require emissions permits and therefore face a cost disadvantage compared to renewable energy.)  Due to its higher price, demand for tar sands oil would drop.  And Russ Girling, TransCanada’s CEO, would undoubtedly think twice before spending well over $5 billion on Keystone XL if he knew that demand for the oil it was being built to ship was going to dry up.  Without oil to ship, the pipeline expansion would be a financial loser.

Best of all, all renewable resources and low carbon technologies would have an economic advantage over fossil fuel use – and the advantage would grow year to year as the emissions caps gradually tighten.  Reducing carbon dioxide and other greenhouse gas emissions would be part of the business of business.  Protestors would not have to threaten civil disobedience to stop dirty fossil fuel project after dirty fossil fuel project.

Let’s remember, stopping Keystone XL is a means to an end.  It sends an important message to our fellow citizens and leaders that climate change must be taken seriously.  Taking on those who turn away from climate science furthers the same cause.  And, in the end, we need a comprehensive policy solution that will lead to rational decision-making and real reductions in greenhouse gas emissions.  Let’s not lose sight of the ultimate goal.

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