How the Keystone XL pipeline could — just maybe — find a path forward under Joe Biden

Last spring, a campaign official for Joe Biden said the Democratic nominee would cancel a key permit for the Keystone XL pipeline if he became president. Although that is a pretty clear signal, supporters of the project have wondered and debated if he'd really pull the pin.

Now, with his presidency set to begin in a matter of days, they likely won't have to wait much longer to find out if Biden will move forward with thwarting the controversial Alberta-to-Nebraska pipeline, as environmental groups say he must.

Last week, Calgary-based TC Energy spoke optimistically of Keystone XL's future as it invited oil shippers to bid for capacity expected to be made available on the existing base Keystone export pipeline system when the new line opens in about two years.

"We're very confident in our project, and we're continuing to proceed with our planned activities to be in service in 2023," a spokesperson said.

The multibillion-dollar project is a priority for both TC Energy and its high-profile investor, the Alberta government, which has also spoken confidently of the project's future.

Democrats and Republicans back sector

So despite the political clouds hanging over the pipeline, could its backers, including Canada's federal government, still find a way forward for the project under Biden? Maybe.

"I'm still not optimistic, but I do still see a pathway where it could happen," said Gary Mar, who was Alberta's representative in Washington, D.C., for four years from 2007.

One is a political route running through Congress.

With the Democrats now in control of the Senate by a slim margin, Biden's legislative path may be smoother, but Mar noted that the oil and gas sector has supporters on both sides of the aisle. TC Energy also forged deals with U.S. unions last summer to work on the project.

Allowing the pipeline, which would feed U.S. refineries, could be used as one way to find the kind of compromise needed to help the new administration pursue an ambitious legislative agenda that includes climate action, higher corporate taxes and racial justice.

"I think you've got to be practical in knowing what you have to have and what you can give up as you move forward on an agenda," said Mar, president and CEO of the Canada West Foundation, a public policy think-tank based in Calgary.

What remains to be seen — and Biden may already know — is whether Keystone XL has the kind of support among U.S. legislators that it would actually provide useful leverage.

It's also suggested by Mar and others that Canada and the U.S. could work together on a North American energy strategy that includes not only climate goals but also a plan for secure oil and natural gas supplies as the transition to cleaner energy unfolds.

In making the case for the pipeline under a broad approach, Ottawa would likely point Biden to the federal government's climate strategies — including the carbon tax and proposed Clean Fuel Standard — aimed at achieving net-zero emissions by 2050.

As the Alberta and federal governments continue to push for Keystone XL, they are no doubt already stressing to the Biden team the actions Ottawa recently announced.

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Some in Alberta see positives in Joe Biden's election win, such as increased demand for the province's oil and greater promotion of green energy.

Climate worry for green groups

Groups worried about climate change, however, have said a project allowing for new expansion of the oilsands is inconsistent with a 2050 net-zero emissions trajectory for North America. Keystone XL is a project that's gained notoriety among environmentalists over the years. Biden himself has referred to it as "tarsands that we don't need."

Former TC Energy executive Dennis McConaghy said that in a "logical world," Canada could at least get to the negotiating table based on the climate plans it's announced, such as the gradual hike in the federal carbon tax on fuels from the current $30 a tonne to $170 a tonne by 2030.

"Canada has actually done something that's tangible in terms of carbon policy," he said.

But while there are "plausible scenarios" where the project might proceed, McConaghy said he believes the pipeline faces long odds under Biden.

"The balance of probabilities are very high [that] he is going to find a way to either outright rescind it or disable it by imposing more environmental reviews," McConaghy said.

But he thinks taking away a legally issued permit would likely lead to litigation from Alberta, TC Energy and whoever else has put money into the project.

In a recent interview with the Calgary Herald, Premier Jason Kenney said he thinks Alberta would have "legal options" to recoup taxpayer money should the permit be cancelled. The Alberta government agreed last year to invest about $1.5 billion as equity in the project, plus loan guarantees.

Political risk of pulling permit

Regardless of any future legal dispute, pulling the pipeline's presidential permit could come with some political risk for Biden, said Christopher Sands, director of the Center for Canadian Studies at Johns Hopkins University in Washington.

Revisiting the permit could energize the U.S. Congress to try to limit the presidential permit process through a new statute, he said, a subject that's been discussed on and off since Barack Obama's presidency.

Instead, Sands said, he thinks Biden's focus will be on achieving more from his broader agenda. Those priorities, plus the COVID-19 pandemic and economic crises, are likely to preoccupy the administration while work on Keystone XL "can quietly chug along," he said in an email.

For an administration that hopes to improve relations with its allies, Sands said, blocking the pipeline could have a negative impact on the relationship with Canada. Green groups would note, however, that the project has opponents north of the border as well.

Until there is a decision, supporters of Keystone XL will continue to tout the merits of the pipeline, whether it's energy security, job creation or post-pandemic stimulus. Likewise, expectant environmental groups will remind Biden of his campaign pledge amid growing concern about climate change.

The incoming administration has indeed appeared to underscore its climate priorities as Biden began choosing nominees for his cabinet.

They include former Michigan governor Jennifer Granholm, an outspoken proponent of clean energy, to be his energy secretary, and New Mexico Rep. Deb Haaland, who supported anti-pipeline protests in North Dakota, to lead the Interior Department.

In addition, the president-elect's new special envoy for climate is John Kerry, who in 2015, when he was secretary of state, announced Keystone XL was incompatible with the goals of the Obama administration.

Though the decision on what to do with the pipeline ultimately rests with Biden, it's not the kind of group one imagines would advise him to reverse course on a pledge that resonated with green voters in his Democratic base.

So while there may still be pathways to building Keystone XL, they would certainly seem to run uphill. Those on both sides of the issue could find out soon.