Recently, Green Party leader Elizabeth May orchestrated an open letter to United States Secretary of State John Kerry, urging the U.S. to reject the Keystone XL pipeline. In her note, Ms. May states that she sent Mr. Kerry "4 facts about Keystone XL." Unfortunately, two of Ms. May's facts aren't actually facts, and two of her facts are so lacking in context as to constitute merely factoids.
Ms. May's first "fact" is the claim that "Keystone hurts the Canadian economy." Her argument is that exporting more bitumen from Alberta's oil sands would increase Canada's "dependence" on fossil fuel exports, leaving us "in a vulnerable position when the carbon bubble bursts." This is essentially a claim that Canada is setting itself up for a bad case of Dutch disease. However, as Philip Cross, former chief economic analyst for Statistics Canada, wrote in Dutch Disease, Canadian Cure, Canada has shown little sign of this mostly mythical illness:
"Dutch Disease has been a misnomer from the beginning. It always was mostly a theory that a boom in the resource sector would raise the exchange rate enough to lower a country's manufacturing output. In reality, manufacturing output did not contract in the Netherlands in the 1960s, for which the term was first coined.
"Nor does it apply to Canada during the resource boom over the past decade. Over half of our manufacturing sector grew steadily up to 2008, in part fuelled by the resource boom and accompanying surge in business investment."
Cross points out that after 2008, Canada's economic problems paralleled those of the U.S., and were not the result of dependence on natural resources.
As Fraser Institute researcher Amela Karabegovich pointed out back in 2009 when she studied Dutch Disease:
"The most important finding [of this study] was that economic institutions--such as the rule of law, which leads to transparency and accountability--matter whether natural resources are a curse or a blessing. That is, early studies overlooked the role of economic institutions and the possible interaction between natural resources and the quality of institutions. Nations with economic institutions of higher quality are more capable of managing their resource revenue and turning it into positive economic growth."
That pretty much describes Canada.
Ms. May's next "fact" is that "Keystone doesn't promote North American energy security." Her argument here seems to be that Canada will have to buy dilution chemicals (diluent) from Saudi Arabia, so it would not "unplug North America from Middle East energy dependence."
First, what Ms. May calls "dependency," others simply call trade: Canada imports about $3 billion in goods from Saudi Arabia annually, and exports about a billion dollars worth of goods right back to them. Second, a new index of energy security risk by the Institute for 21st Century Energy suggests North America is already "energy secure," with Canada ranking as the fifth most energy secure country among the world's top energy users, and the U.S. as the sixth most secure.
Ms. May's third "fact" is that "Keystone won't replace rail transportation." She's partly right on that, as all modes of oil transport are going to be needed to get Canada's oil to market. But while Keystone won't replace all rail transportation, we know that stalling Keystone and other pipelines, will guarantee that more oil will move by rail and road, sooner rather than later, and those modes while being largely safe, they are still less safe (and more costly) than moving oil by pipeline. Consequently, Ms. May's opposition to Keystone and her desire to stall/kill the project will increase environmental risk, not decrease it.
Ms. May's fourth "fact" is that "Keystone limits our ability to reduce greenhouse gas emissions." She bases this on Canada's failure to achieve greenhouse gas reduction targets set in Copenhagen in 2009. Again, this is a truth that lacks context. There's no question that the development and consumption of Alberta's oil sands will add greenhouse gases to the atmosphere. However, on a global basis (which is all that matters), Canada's emissions as a country are a tiny fraction (almost two per cent) of global emissions.
The oil sands are about eight per cent of Canada's emissions, or 0.15 per cent of global emissions. Doubling that, or even quadrupling it would most likely not significantly alter the trajectory of climate change regardless of whether one believes that the climate is very sensitive to greenhouse gases or only modestly so. Finally, projected growth in emissions from China and India would make the impact of Canadian emission reductions negligible.
You can have your own opinions Ms. May, but you can't have your own facts.
CORRECTION: An earlier iteration of this post stated "Canada imports about $2 billion in goods from Saudi Arabia annually." Canada actually imports about $3 billion from Saudi Arabia annually. The text has been altered to reflect the correction.
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