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Impact of the Keystone XL pipeline on global oil markets and greenhouse gas emissions

Abstract

Climate policy and analysis often focus on energy production and consumption1,2, but seldom consider how energy transportation infrastructure shapes energy systems3. US President Obama has recently brought these issues to the fore, stating that he would only approve the Keystone XL pipeline, connecting Canadian oil sands with US refineries and ports, if it ‘does not significantly exacerbate the problem of carbon pollution’4. Here, we apply a simple model to understand the implications of the pipeline for greenhouse gas emissions as a function of any resulting increase in oil sands production. We find that for every barrel of increased production, global oil consumption would increase 0.6 barrels owing to the incremental decrease in global oil prices. As a result, and depending on the extent to which the pipeline leads to greater oil sands production, the net annual impact of Keystone XL could range from virtually none to 110 million tons CO2 equivalent annually. This spread is four times wider than found by the US State Department (1–27 million tons CO2e), who did not account for global oil market effects5. The approach used here, common in lifecycle analysis6, could also be applied to other pending fossil fuel extraction and supply infrastructure.

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Figure 1: Simple model of global supply and demand for oil: how increasing global oil supply via Keystone XL would decrease prices and increase consumption.

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Acknowledgements

The authors would like to thank R. Plevin, T. M. Power and D. S. Power for their review and comments, M. Davis for her editorial acumen, and K. Tempest for his timely research support.

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Authors

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P.E. and M.L. designed the research. P.E. designed and constructed the spreadsheet model. P.E. and M.L. analysed the results and wrote the paper.

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Correspondence to Peter Erickson.

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The authors declare no competing financial interests.

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Erickson, P., Lazarus, M. Impact of the Keystone XL pipeline on global oil markets and greenhouse gas emissions. Nature Clim Change 4, 778–781 (2014). https://doi.org/10.1038/nclimate2335

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  • DOI: https://doi.org/10.1038/nclimate2335

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