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Keystone XL Pipeline EIS: Implications for the Pacific Northwest

Posted in Clean Energy, Climate Change, Emerging Policy, Energy Policy, NEPA, SEPA

My partner Diane Meyers posted recently on the approval of the Keystone XL EIS, and that led me to thinking about the implications of this document with respect to the Pacific Northwest. The Keystone XL EIS may be an important precedent for energy projects in the Pacific Northwest, notably the efforts to export coal from two proposed terminals on the Washington coast. Like Keystone, opposition to those two export terminals is largely centered on the concept that Washington should not be enabling China’s coal-based energy generation economy, and that coal exports from Washington will lead to an increase in greenhouse gas emissions. The Keystone XL EIS provides some potentially important precedence on how to analyze this issue under environmental impact review statutes like the National Environmental Policy Act (NEPA) or state analogues like Washington’s State Environmental Policy Act (SEPA).

If you’ve been following the coal export issue, you’ll recall that there are two proposed terminals, one in Longview, Washington, and the other in Cherry Point, Washington. Both require numerous state and federal permits, and both are about to undergo SEPA and NEPA review, but are at different stages of that process. The Army Corps of Engineers is the lead agency for the federal NEPA review, and has made the decision for the Cherry Point project to not review potential cumulative greenhouse gas emission impacts from that project. This decision was based on the Corps’ conclusion that the burning of coal in China was outside of the Corps’ control and responsibility, and therefore it would be improper to include those potential impacts in its NEPA analysis. For Cherry Point, the co-lead state entities (Ecology and Whatcom County) did decide that such potential emissions were going to be evaluated under the parallel SEPA process, an unprecedented expansion of SEPA review. I’d expect similar decisions to be made for the terminal in Longview.

The Keystone XL EIS concluded that approval or denial of the pipeline would not change the projected 830,000 barrels per day production of oil from oil sands in Canada, because there are other oil transport routes that would be available to bring that crude to market. (Section 1.4 of the EIS contains a detailed discussion of market conditions, and a briefer discussion of this dynamic is on Page ES-16 of the Executive Summary.) So, if the Keystone XL pipeline isn’t built, production and consumption of heavy crude from Canada oil sands would occur at the same rate. Stated differently, trying to limit oil consumption by limiting oil transportation infrastructure is essentially a game of Whac-A-Mole that market forces will ensure you lose. Therefore, the cumulative greenhouse gas emissions from the Keystone XL pipeline are limited to (a) the incremental greenhouse gas emissions associated with the construction and operation of that pipeline as compared to other transport options for crude derived from Canada oil sands; plus (b) the difference between greenhouse gas emissions associated with the lifecycle of Canada oil sand crude as compared to another source of crude oil that would substitute for Canadian crude to meet global demand. The detailed discussion of these emissions for the Keystone Pipeline can be found at Sections 4.14.2 and 4.14.3 of the EIS, with the complete analysis on the “incremental indirect lifecycle” emissions contained in Appendix U of the EIS.

How does this tie in to coal exports from Washington? I’ve long been suspicious of the argument that coal exports will result in increased greenhouse gas emissions from burning that coal in China. The movement and export of coal is in response to market conditions. Just as is seen with respect to oil transport from Canada, I firmly believe that if Powder River Basin coal is not exported to Asia through these proposed terminals, that coal will find another route to market, or Asia will find other sources of coal to meet its growing demand for fossil fuels. Therefore, if Ecology proceeds in analyzing extra-territorial impacts of these coal exports under SEPA (including burning of coal in Asia) it should first perform a similar market analysis as the one done under the Keystone XL EIS to determine whether the rate of coal consumption in China would be the same regardless of whether the proposed terminals are built. The next step would be to analyze whether Powder River Basin coal will find its way to Asian markets through other channels (such as Canadian ports) if the proposed terminals in Washington are not built. As the sheer size of the Keystone EIS shows, teasing apart such market dynamics is a complex exercise, but one that is probably needed if Ecology moves forward with SEPA review of extra-territorial impacts. If such an analysis is undertaken, I bet the facts will lead Ecology to a similar conclusion as the one reached by the State Department for the Keystone XL project–that the approval or denial of the coal export terminals in Washington will not move the needle at all in terms of coal consumption in Asia.