The Keystone XL pipeline would link crude oil from Canada to refineries and barges farther south. Credit: Ashley Cooper pics/Alamy

The proposed Keystone XL oil pipeline could significantly increase greenhouse-gas emissions, suggests an analysis published on 10 June in Nature Climate Change1.

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The pipeline would carry as many as 830,000 barrels of crude oil per day from the tar sands of western Canada to the midwestern United States, where it would connect to existing pipelines that run to the Gulf of Mexico. The economic model used in the study suggests that this additional supply would lower oil prices and drive consumption, producing the equivalent of up to 110 million tons of carbon dioxide per year. (That equals about 1.7% of the United States' total greenhouse gas emissions in 2012, according to the US Environmental Protection Agency.)

In essence, every additional barrel of oil produced as a result of Keystone XL would increase global oil consumption by 0.6 barrel, the paper finds. “If that’s the case, that’d be a big greenhouse-gas impact,” says co-author Peter Erickson, a senior policy analyst at the Stockholm Environment Institute in Seattle, Washington.

Keystone XL has been the subject of intense debate in the United States since it was proposed by TransCanada Corp. in 2008. The decision about whether to proceed with construction ultimately rests with US President Barack Obama, who has said he will approve the pipeline only if it “does not significantly exacerbate the problem of carbon pollution”. A US State Department assessment has concluded that Keystone XL would increase emissions by just 1.3 million-27.4 million tons per year.

But Erickson and his co-author say that the State Department's economic model failed to account for the pipeline's effect on global oil prices, and thus consumption. Because the State Department did not reveal full details of its model, the new study's authors cannot be absolutely certain of the variables that that the government analysis employed. A State Department spokesman declined to comment on the Nature Climate Change paper.

David Victor, a climate-policy expert at the University of California, San Diego, says that regardless of whether Keystone XL becomes a reality, oil production from Canada's tar sands will increase. Delivery by rail car might be slightly more expensive than transporting crude by pipeline, but that will only nick oil company profits, Victor says. “It's extremely difficult to strand oil,” he adds.

Pipeline critic Ken Caldeira, an atmospheric scientist at the Carnegie Institution in Stanford, California, says that the pricing effects of Keystone XL are, to some extent, beside the point. “My concern is not so much the increase in emissions caused by Keystone XL, but that Keystone XL is part of a broader pattern of behaviour,” he says. Cancelling the pipeline “signals to the market that these kinds of polluting projects won’t be approved,” Caldeira adds.

Others are sceptical that any additional oil production enabled by Keystone XL would push oil prices down. The study tells “a reasonable story,” says Maximilian Auffhammer, an environmental economist at the University of California, Berkeley. But the oil industry might react to cheaper oil by restricting its output, pushing prices higher — and in principle, lowering consumption and emissions.

Erickson acknowledges that the paper does not make a definitive prediction. But he argues that it demonstrates why pricing effects should be taken into account for not only Keystone, but other energy development. “These are the types of questions that should be analyzed,” he says.