Keystone Pipeline shows it is tough to curb carbon upstream

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article

The battle over U.S. approval of the Keystone oil pipeline shows the difficulty in regulating carbon emissions through the supply of crude oil, barring an unlikely global agreement to curb demand.

If approved by Washington later this year, the pipeline would transport land-locked, high carbon Canadian tar sand crude to Gulf Coast refineries and from there to world oil markets.

A U.S. Department of State report last Friday concluded that denying the pipeline would have a negligible impact in reducing climate change, because railways or alternative pipelines would still find the crude a global outlet.

By implication, the U.S. Environmental Impact Statement saw no way to stem the flow of tar sands crude in the absence of some kind of global regulation reining in oil demand, although the report did not examine options for regulation.

Options might include an upstream carbon tax or a carbon labelling standard.

Such regulation is all but unthinkable at present, leaving policy focused on national fuel economy standards for cars which are less controversial, as they would save U.S. consumers money, but which green groups may find too slow and incremental.

CARBON LABELLING

Crude oil carbon labelling has so far struggled because global standards for measuring greenhouse gas emissions are at an early stage.

The European Union's executive Commission has tried to regulate transport fuel through a low carbon fuel standard which would label the upstream carbon emissions of different crudes and biofuels.

The EU already sets refiners carbon intensity targets, under its Fuel Quality Directive, which coupled with carbon labelling could in theory rein in demand for high-carbon Canadian tar sands, although these presently have no European market.

Opposition among oil producers and from Canada is based on perceived unfair discrimination against tar sands, given that other heavy crudes are similarly carbon intensive but have less well developed greenhouse gas emissions data.

"The proposed directive unfairly singles out and penalizes the oil sands," Ron Liepert, Minister of Alberta Energy, said in a speech to the European Parliament two years ago.

"Alberta is fully prepared to have our crude oils assessed and competing on a fair and level playing field with all other crudes. The current path of the directive provides a commercial advantage to other heavy crude imports. All crude oils should be treated equally based on scientifically verifiable data."

The European Commission has delayed any ruling on tar sand labelling until later this year.

GLOBAL CARBON PRICE

The EU has also introduced regional carbon prices through a cap and trade scheme.

Some economists argue that the most efficient carbon pricing solution would be a global carbon tax on upstream fossil fuel production, whose extra cost would pass to consuming countries and the tax revenue retained by exporting governments.

Such a tax would dampen demand and foster alternatives, however, making agreement by major oil producers problematic.

Some oil firms have voiced support for a carbon tax on the condition that it is applied globally, which would make it unlikely any time soon.

Exxon Chief Executive Rex Tillerson expressed that view in his support for a carbon tax four years ago.

"A carbon tax may be better suited (than cap and trade) for setting a uniform standard to hold all nations accountable. This last point is important. Given the global nature of the challenge, and the fact that the economic growth in developing economies will account for a significant portion of future greenhouse-gas emission increases, policy options must encourage and support global engagement."

CARBON INTENSITY

Environmental opposition to tar sands is based both on the higher emissions associated with a barrel of tar sands crude compared with the U.S. average, and cumulative emissions given the size of the resource.

The greenhouse gas emissions from burning transport fuel in cars, trucks and planes can be measured on a well to wheels (WTW) basis which accounts for extraction, refining and the burning of the final product in an engine.

Most emissions, at 70-80 percent, are at the final stage of gasoline combustion where the origin of the crude oil is irrelevant.

But tar sands have significantly higher upstream emissions.

There are two approaches to Canadian oil sands extraction: surface mining of bitumen which is then processed remotely to make a synthetic crude oil (SCO); or steam extraction from underground and in situ mixing with a diluent such as natural gas condensate to make dilbit (diluted bitumen).

The process produces higher carbon emissions because heat is needed to make the raw bitumen flow, and because of greater electricity demand and the need for hydrogen in the case of synthetic crude manufacture.

Last Friday's report estimated that Canadian tar sands emitted 17 percent more greenhouse gases than the average barrel of crude oil refined in the United States in 2005.

That used a conservative National Energy Technology Laboratory estimate from 2009 which is higher than many measures.

CUMULATIVE EMISSIONS

If developed entirely, Canadian tar sands would probably account for a sizeable fraction of the carbon that humankind can still burn and stay within safer climate limits, as Columbia University climate scientist James Hansen argued in a blog two weeks ago.

"We stand at a fork in the road. Conventional oil and gas supplies are limited. We can move down the path of dirtier more carbon-intensive unconventional fossil-fuels, digging up the dirtiest tar sands and tar shales, hydrofracking for gas, continued mountain-top removal and mechanized destructive long-wall coal mining. Or we can choose the alternative path of clean energies and energy efficiency."

The State Department concluded that additional, cumulative emissions would be rather negligible from allowing Keystone because alternative infrastructure would otherwise take its place.

By implication, the report leaves U.S. action to curb transport sector carbon emissions resting on fuel economy standards which are unlikely to drive a serious shift to hybrid and electric cars before 2030.


Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...


Comments (1) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left

tax this    
Nebraska  |  March, 05, 2013 at 01:50 PM

If the Keystone makes us sufficiently independent to pull our military out of the Middle East...and stay the hell out of there...it will be well worth it. This ridiculous talk of punishing carbon taxes is utter nonsense. The value of carbon cap & trade credits has been well established for close to a decade...and there is practically no value. The Chicago Climate Exchange (CCX) folded long ago due to the inherent worthlessness of carbon credits. In the face of this reality any tax on carbon would be untenable. Such an idea is intended only to panic and punish us but we've seen it up close for long enough not to be taken in any more.


Ports and River Receiving Systems

Material handling equipment for deep-water seaports and river terminals requires special design and construction to optimize speed, reliability and ensure ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form