With Biden poised to kill Keystone XL, experts say it’s time to look beyond oil economy

‘In the long term, the oil industry isn't something Alberta can wager on as being the main driver of job growth’
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The Keystone XL pipeline’s imminent cancellation may be the “wake-up call” Alberta needs to break from its reliance on oil, experts say.

On Jan. 17, news broke that U.S. president-elect Joe Biden could rescind the pipeline’s construction permit as early as Jan. 20. While Canadian politicians scramble to salvage the project, experts and Indigenous land defenders say it is time to transition away from a carbon economy.

First proposed in 2008, Keystone XL is expected to carry 830,000 barrels of crude oil a day from Alberta to Nebraska and eventually the Gulf Coast.

But the project quickly raised concerns not just around the carbon footprint of the oil it would carry, but also the potential environmental harm for the water and land along its path. Although the project has recently recruited some Indigenous investors in Canada, many Indigenous groups on both sides of the border oppose the pipeline.

“The resistance around Keystone XL has been a cornerstone of fighting and a rally call around a lot of things that we have always held dear to our heart,” said Joye Braun, a member of the Cheyenne River Sioux Tribe in South Dakota and a frontline community organizer with the Indigenous Environmental Network.

These include “things like Land Back, making sure our water is protected, standing up for our children, for missing and murdered Indigenous women.”

Given Biden’s track record, the expected cancellation does not come as a major surprise.

During his presidential campaign in May 2020, Biden pledged to cancel the project — a move in line with his other promises to reverse President Donald Trump’s environmental rollbacks, such as re-entering the Paris climate agreement. He was also vice-president when the Obama administration vetoed the project in 2015. Held up in the courts and environmental reviews, Keystone XL languished until it was approved in 2017 under Trump.

“If you're in the fossil fuel sector, you're going to have to look at the future path and many companies are looking to diversify their portfolios.”

Despite the uncertainty surrounding the project, Alberta has bet big on Keystone XL. In spring 2020, the province announced a $1.5-billion equity investment into the project as well as $6 billion in loan guarantees.

“The Alberta government certainly speculated on the continuation of the Trump presidency because it was pretty clear that without it, it wouldn't go ahead,” said Dr. Werner Antweiler, an economist at the University of British Columbia's Sauder School of Business. In late 2020, the province spent over $1 million on efforts to lobby the incoming Biden administration for Keystone XL’s continuation.

Changing economy

In a Jan. 17 statement, Alberta Premier Jason Kenney said the expected cancellation would cost jobs in both countries, harm Canada-U.S. relations and weaken the United States’ energy security. He urged the federal government to prioritize saving the project, which the federal Liberals have also long supported.

At the same time, Kenney said Alberta would look into “all legal avenues available” in the case that Biden does kill the pipeline. TC Energy — formerly TransCanada, the company behind Keystone XL — previously sued the U.S. government for $15 billion USD after former president Barack Obama vetoed the project. But, as reported by the Globe and Mail, it would be tough to legally challenge the expected cancellation of the project’s construction permit.

But experts pointed out that from an economic perspective, it may be time for Alberta to consider pivoting away from its reliance on oil.

“Right now, the government's going in all the wrong directions.”

According to Antweiler, the demand for oil in many developed countries will likely fall in the coming years due to concerns about carbon emissions, the rise of renewable energy and the arrival of battery parity, which would allow for affordable electric cars. This does not mean a future of challenges for Alberta’s economy, however. Instead, these changes can open up new opportunities.

“We are moving towards renewable energy because it's cleaner and also they are providing opportunities to actually have cheaper energy,” Antweiler said.

“We see opportunities in new markets, whether it's making fuel cells or whether it's building solar and wind equipment.… If you're in the fossil fuel sector, you're going to have to look at the future path and many companies are looking to diversify their portfolios.”

There is also another fundamental economic change within the oil sector.

“The shift towards more capital intensity will continue,” he said. “In the long term, the oil industry isn't something Alberta can wager on as being the main driver of job growth simply because it's undergoing these fundamental changes.”

Broadening the picture

Some are taking a wider look at what this transition could look like.

Besides noting a similar long-term forecast about the decline of oil and the potential for wind, solar and geothermal power in Alberta, Dr. Laurie Adkin — a political scientist at the University of Alberta — also highlighted the value of expanding broader infrastructure like water conservation, sustainable agriculture and public transportation.

“Remember that Indigenous sovereignty is real and Indigenous rising is real. They tried to get rid of us, but sorry, we're growing and we're rising.”

At the same time, Adkin emphasized the need to invest in human services to strengthen social safety nets and help workers transition into new roles. She added that it is contradictory for Alberta to emphasize the job losses from the upcoming Keystone XL cancellation when the province also planned to cut thousands of jobs in the public sector.

“We need to think about all these things when we look at an alternative economy,” Adkin said. “Right now, the government's going in all the wrong directions.”

Ultimately, she pointed to the need for climate leadership not just from Alberta but also from the federal government to get Canada on the path to becoming a low-carbon economy. In 2019, the House of Commons declared a climate emergency.

“It is not consistent to be supporting these pipelines,” Adkin said. “Is it an emergency, or is it not an emergency?”

Just the start

In the meantime, environmental activists and Indigenous land defenders point out that the expected cancellation of Keystone XL is just the start.

“I’m optimistic, but I'm cautious,” said Braun. “I know that even though he will sign it, there's still going to be work to do.”

In Canada, Antweiler predicted that the demise of Keystone XL could mean a bigger emphasis on completing the Trans Mountain pipeline expansion, which carries crude oil from Alberta to the B.C. coast to reach Asian markets. This project has also faced major protests and legal challenges from Indigenous groups and environmental activists.

In the U.S., Braun said the fights over the Dakota Access pipeline and Line 3 replacement pipeline remain active.

“There's still #NoDAPL. We need to stop Line 3. We need to support stopping the Trans Mountain pipeline up there and support our Tiny House Warriors. Remember that Indigenous sovereignty is real and Indigenous rising is real. They tried to get rid of us, but sorry, we're growing and we're rising,” she said.

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