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

Climate policy and analysis often focus on energy production and consumption, but seldom consider how energy transportation infrastructure shapes energy systems. U.S. 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 U.S. refineries and ports, if it ‘does not significantly exacerbate the problem of carbon pollution’.

The authors 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. They 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 tonnes CO2 equivalent annually. This spread is four times wider than found by the U.S. State Department (1–27 million tonnes CO2e), which did not account for global oil market effects.

The approach used here, common in life-cycle analysis, could also be applied to other pending fossil fuel extraction and supply infrastructure.