Politics

Biden to Cancel Keystone XL Pipeline in Inauguration Day Executive Order

WASHINGTON — President-elect Joseph R. Biden Jr. is expected to cancel the Keystone XL pipeline permit on his first day in office, quickly reversing his predecessor’s approval of a project to move oil from Canada to the Gulf of Mexico long opposed by environmentalists, according to a person familiar with Mr. Biden’s plans.

Opponents of the nearly 1,200-mile pipeline have regarded it as both a contributor to climate change and a symbol of the country’s unwillingness to move away from an oil-based economy. Many Republicans, including President Trump, argued the pipeline would create jobs and help local economies.

In late 2015, former President Barack Obama rejected the permit for the project, arguing it would undermine American leadership on the transition to sustainable fuels. Mr. Trump’s administration reversed that decision in early 2017, giving a green light for construction of the project to begin.

Environmental activists were pleased when Mr. Biden said during the presidential campaign that he intended to once again cancel the permit. That is expected to happen on Wednesday after he is inaugurated, amid a flurry of other executive actions that Mr. Biden plans to take to demonstrate his determination to reverse Mr. Trump’s legacy. Ending the Keystone project would be one way to send such a signal.

But even without Mr. Biden having acted — and despite Mr. Trump’s aggressive push to move it forward — the project had been languishing because of legal roadblocks and economic forces. Last July, the Supreme Court rejected a request from the Trump administration to allow construction of parts of the oil pipeline that had been blocked by a federal judge in Montana.

That ruling disrupted the plans of the Canadian company TC Energy to build the Keystone XL, which would carry crude oil from Canada to Nebraska, where it would connect with an existing network to deliver the crude to refineries on the Gulf of Mexico.

In their Supreme Court brief, lawyers for TC Energy said the decision would cost jobs unless the justices intervened.

“TC Energy would not be able to employ a majority of the approximately 1,500 unionized construction workers, and approximately 300 administrative, inspection and management personnel it would otherwise employ for pipeline construction in 2020,” the company’s lawyers said. “The loss of so many high-paying jobs, along with the loss of the secondary employment and economic opportunities that construction activities would otherwise create in local communities, would be particularly harmful in the current distressed economy.”

But energy economists said that even if the company could clear all the legal hurdles, the economic viability of the project is murky. That is in part because the slumping global price of oil makes it unprofitable for companies to produce oil from the Canadian tar sands, a complex and expensive process that involves injecting steam and chemicals deep into the tar, in order to melt and extract petroleum.

Economists generally estimate that the production of petroleum from Canadian tar sands is only profitable when global oil prices range between $65 and $100. But oil prices averaged only about $40 a barrel over the course of 2020 and are expected to remain below $50 a barrel through 2022, according to the Energy Information Administration, the statistics office of the Energy Department.

“This is going to have greater symbolic importance than market importance,” said Kevin Book, managing director at ClearView Energy Partners, a nonpartisan research firm, of the new administration’s plans to rescind the project’s permit. “The Keystone XL has been pending for a decade. If you can go one decade without it, investors might reasonably question if you can go three.”

Experts noted that even if the oil that would be produced and moved by the pipeline was eventually burned, its contribution to global warming would be infinitesimal compared with the greenhouse gases produced by entire economic sectors, such as automobiles. But Mr. Biden is also expected to move quickly to reinstate Obama-era controls on auto pollution, which Mr. Trump had rolled back. It will likely be a year or more before those rules could be legally back in place.

“In terms of climate change policy, there is so much else that can be done that makes a bigger difference,” said Robert Stavins, an environmental economist at Harvard. “However, I can see the new administration looking to abandon Keystone because it is something that can be done quickly with a stroke of a pen without Congress.”

Had it been completed, the pipeline was designed to take as much as 830,000 barrels a day of Canadian and North Dakota crude to refineries in Texas and Louisiana for processing into oil that could be exported oversees or used to enhance domestic supplies.

The loss of Keystone XL is yet another blow to the oil-producing province of Alberta, which has been struggling with low prices for more than five years.

Last spring, its government invested $1.1 billion and offered loan guarantees to keep the project alive. Several experts said that most of that money is likely now gone.

On Monday, Jason Kenney, Alberta’s premier, urged Mr. Biden to hear out Canada’s case and threatened to take legal action if the new administration shuts down the project.

“We hope President-elect Biden will show respect for Canada and will sit down and at the very least talk to us,” Mr. Kenney said at a news conference.

While Prime Minister Justin Trudeau made climate change one of his key issues, he has repeatedly argued that Canada needs a strong energy industry supported by new pipelines to finance a shift to a carbon free future. He raised Keystone XL during a call with Mr. Biden in November.

Mr. Trudeau did not comment about the project on Monday.

Mr. Biden’s decision to block it will be part of a broader effort by his administration to reverse Mr. Trump’s environmental record and return the United States to the positions it took during Mr. Obama’s tenure.

In addition to canceling the pipeline, Mr. Biden is expected to focus reducing planet-warming carbon emissions and reinstating environmental regulations that Mr. Trump rolled back. Mr. Biden’s officials will also pursue policies that promote electric vehicles and climate-resilient infrastructure.

In November, Mr. Biden stressed his plans to reorient the nation’s environmental posture during his announcement of former Secretary of State John F. Kerry as his climate envoy.

“I don’t for a minute underestimate the difficulties of meeting my bold commitments to fighting climate change,” Mr. Biden said. “But at the same time, no one should underestimate for a minute my determination to do just that.”

Ian Austen contributed reporting.

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