Energy Business

Another Delay in Store for Keystone XL Pipeline?

A Nebraska judge issued a ruling on Wednesday that could delay further a U.S. decision on whether to build the Keystone XL pipeline proposed more than five years ago by TransCanada Corp. (NYSE: TRP). The judge’s ruling tossed out state legislation that permitted the governor to approve the route of the pipeline without consulting the state’s Public Service Commission. That means that TransCanada must get commission approval, a process that can take up to seven months.

One almost certain outcome of the decision is that a U.S. State Department decision on the pipeline will not be made anytime soon. There is now no reason for President Obama to wrestle with the question of making a decision before the November election. He probably would not have announced a decision before then anyway, but now he has an excuse that he did not have to make up.

There is no political advantage for the president to OK the pipeline, except to help re-elect Democratic Senators from Louisiana and Alaska, both of whom strongly support the pipeline and are battling for their political lives in states that are heavily Republican. The bulk of the advantages to the Democrats lie with rejecting the pipeline. It gives the party’s environmentalists a big win and sets them up to support the Democratic nominee for president in 2016.

The recently released environmental study from the State Department found that the pipeline would have only a small impact on the environment or on future emissions of carbon dioxide. Pipeline proponents celebrated, but they might have been well-advised to wait.

President Obama has set a goal of a 17% reduction in U.S. carbon emissions by 2017. So far the U.S. has reached a 10% reduction, but the goal that will be essentially impossible to realize if Keystone XL volumes are added in. Construction of the pipeline will not affect production from the oil sands, so that 3% to 4% of added emissions will not change. The only difference is that the United States will not be directly culpable in adding carbon dioxide to the earth’s atmosphere. It is not much, but it is enough to hang the president’s political hat on.

The state of Nebraska plans to appeal Wednesday’s ruling.