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Keystone and Fukushima: Balancing Needs and Risks

New York Law Journal

September 18, 2013

President Barack Obama has announced that he will shortly decide whether to approve the proposed Keystone XL pipeline extension from Alberta, Canada to Steele City, Neb. Keystone's sponsor, TransCanada Keystone Pipeline, with support from the Canadian government, contends that the Keystone extension would, together with domestic shale gas, help the United States achieve energy independence from unreliable or unsavory OPEC and other petroleum exporting nations. The project's opponents, including much of the U.S. environmental community, are asking the president (or, more accurately, the secretary of state) to disapprove the project because of its adverse climate change impacts and localized environmental risks.

At the same time, Japan's new Prime Minister, Shinzo Abe, has embarked on an ambitious plan both to restart Japan's damaged Fukushima Daiichi nuclear plant (in order to boost Japan's economy and reduce its short-term reliance on imported oil), and to export Japan's nuclear technology to developing nations seeking secure power for economic development without increasing greenhouse gas (GHG) emissions.

Together, Keystone and Fukushima present important lessons in balancing climate change impacts (whether positive or negative) against other environmental and public policy goals.

The Keystone Proposal

The Keystone extension would have a capacity of 830,000 barrels per day (bpd) of crude oil, most of which would come from the so-called "oil sands" ("tar sands" to project opponents) near Hardisty in Alberta, a region with so much bitumen in its heavy clay-like soils that its proven reserves, under prevailing economic conditions, were estimated by the International Energy Agency at more than 170 billion barrels as of January 2008, putting Canada second to Saudi Arabia in proven reserves and holding out the prospect that oil sands production could, over the next two decades, rise to approximately 3 percent of global oil supply (6 percent of non-OPEC supply).

TransCanada and the Canadian government argue that this will not only enhance U.S. energy security by reducing reliance on oil from the Middle East and Venezuela but will also generate some 120,000 new U.S. jobs annually over the next 25 years, a claim that seems significantly overstated. They also contend that the Keystone extension will exceed all relevant safety standards and have no discernible effect on global GHGs because oil sands petroleum will find its way to market either in the United States or abroad even without Keystone.

Project opponents dispute all of these claims (except the immense amount of the oil sands reserves). Most of the claimed jobs would be limited to the project's relatively short construction period or would not be attributable to the pipeline at all. More importantly, opponents claim that both TransCanada's safety record and the nature of the product to be shipped through the pipeline extension pose serious risks to the adjacent environment, and that the GHG impacts of the project would be a significant, even decisive, step backward in the international community's attempt to reign in climate change before its impacts become irreversible.

Current Status of Keystone

Procedurally, the Keystone extension is now before the secretary of state, whose approval is required because of the pipeline's Canadian origin. The State Department has prepared an environmental impact statement (EIS) and a draft supplemental EIS (DSEIS) on the project and is now reviewing the thousands of comments received from project proponents, opponents and, most recently, the U.S. Environmental Protection Agency (EPA) on that DSEIS. In its April 22, 2013 comments, EPA objected to the DSEIS analysis on two separate grounds, GHG emissions and pipeline safety.

With respect to GHG emissions, EPA noted that the DSEIS concedes that lifecycle GHG emissions from oil sands crude would be significantly greater than from average U.S. crude oil, largely because of the very energy-intensive process of heating and separating the bitumen from the surrounding soil and converting it into a liquid that can be pumped, at higher than normal temperatures, through pipelines.

These excess emissions could amount, on a "well-to-tank" basis, to an 81 percent increase over average U.S. crude oil emissions (and at least 17 percent greater on a "well-to-wheel" basis), resulting in some 18.7 million metric tons of incremental carbon dioxide equivalent emissions annually and, potentially, up to 935 million metric tons over the pipeline's 50-year life.

Agreeing with project opponents, EPA rejected the DSEIS conclusion that these emissions were likely even without the Keystone extension. In particular, EPA faulted the DSEIS analysis of alternative railroad delivery options for oil sands crude, largely because that analysis did not reflect the higher cost of shipping the heavier oil sands crude and capacity constraints on rail shipment of that crude. Other commentators have also noted that alternative pipeline options to ship oil sands product west for export across the Pacific would face formidable obstacles from Canada's native communities and the absence of refinery capacity equal to that found on the U.S. gulf coast. Since environmental reviews under NEPA are required to assume a "reasonable worst case," it seems clear that the DSEIS conclusion that the Keystone extension would not significantly affect GHG emissions needs to be corrected before any action by the secretary of state.

With respect to pipeline safety, EPA's principal concern was the nature of the diluted bitumen (known as dilbit) that might be released from a spill. Because dilbit is far heavier than conventional crude oil, it tends to settle at the bottom of lakes and rivers, rather than floating on the surface as lighter oil does. Pointing to a series of past releases of dilbit that have worked their way into river sediment, notably in the Kalamazoo River following the 2010 Enbridge spill in Michigan, EPA noted the continuing nature of those impacts and the likely need to dredge the river to remove the sediments.

NRDC's comments pointed to a further safety risk—the increased operating temperatures under which the Keystone extension would have to operate to convey dilbit and the limitations in TransCanada's two-pronged spill alert system that could permit spills of five to 10 million gallons to go undetected for weeks (or possibly months) in remote areas. Moreover, the fact that TransCanada has experienced at least two serious pipeline ruptures within the past several years calls into question its assurances that the Keystone extension would have only a minuscule risk of failure, a claim similar to that made for the facilities involved in the prior accidents.

Balancing Competing Claims

How should the secretary of state (and the president) balance these competing claims and considerations for the Keystone extension? To start with, Keystone's contribution to the global oil supply, even over the next two decades, would be relatively modest and thus unlikely to materially affect petroleum prices, either in the United States or abroad. Nor, given the United States' expanding supplies of natural gas, its increasingly stringent fuel economy standards and the expected exploitation of offshore oil reserves by U.S. firms, does Keystone's oil seem necessary for U.S. "energy security" (even if that elusive goal could be defined in purely national terms). Similarly, the incremental jobs claimed for Keystone would consist largely of temporary construction jobs or engineering, financial sector and other professional jobs that would likely result from other (and cheaper) sources of energy as well.

On the other hand, Keystone's incremental contribution to global GHGs would be significant over the pipeline's life and would represent a real step backward in U.S. efforts to reduce such emissions, particularly in the absence of any meaningful federal climate legislation and the president's consequent need to rely exclusively on regulatory action for such reductions.

Finally, the risk of local environmental impacts from pipeline spills or ruptures, while low, is nevertheless real and could pose persistent and difficult remedial challenges under even state-of-the-art construction and operating procedures. Overall, therefore, the modest economic and strategic benefits from the Keystone extension are, in this author's judgment, insufficient to overcome the clearly adverse climate impacts and local environmental risks of the project.

Fukushima Redux

In an earlier column ("International Law Lessons from the Fukushima Nuclear Disaster," April 29, 2011), the author discussed the impact of the March 2011 earthquake and tsunami on Japan's Fukushima Daiichi nuclear complex. That column noted that, while the world may have dodged a nuclear bullet insofar as short-term atmospheric contamination was concerned, there remained a longer-term risk of serious marine contamination from the radioactive waste water used by Japanese authorities to prevent a meltdown of spent fuel pools and reactor cores. However, because nuclear power offered a way (subject to economic feasibility) for both developed and developing nations to expand their economies while reducing their reliance on imported fossil fuels, I suggested a number of steps for the international community to consider in order to reduce the risk of significant cross-border radioactive contamination from future plants, whether in Japan or in less technically advanced countries.

Among those reforms were mandatory nuclear power plant standards by the International Atomic Energy Agency (IAEA), uniform export controls for nuclear fuel, equipment and services, continuing corporate liability for suppliers of nuclear services and equipment, and IAEA spent-fuel repositories and regional emergency response stations to contain nuclear accidents without the inordinate delays of Japan's response to Fukushima.

Few, if any, of those reforms have been instituted by the IAEA or others. Nevertheless, policymakers concerned with alternatives to imported oil have continued to explore nuclear power options for their nations' development, just as Canada has sought to persuade the United States to utilize its oil sands reserves to reduce Middle Eastern and Venezuelan imports. Moreover, unlike the oil sands, nuclear power promises relief from escalating GHG emissions and thus more responsible national action to meet international GHG-reduction goals.

Expanded shale gas production in the United States has made new, and even existing, nuclear plants uneconomic, with the owners of five existing plants announcing their closure in 2013, including Entergy's Vermont Yankee plant on Aug. 27. For countries without access to reliable natural gas, however, nuclear power can remain an attractive option, as Japan's current effort to export its nuclear technology indicates.

However, events within the past month demonstrate that, despite its climate change and energy security benefits, nuclear power can present significant risks to the international environment even when designed and managed by ostensibly technically advanced countries and firms. On Aug. 20, Tokyo Electric Power (Tepco), which owns the damaged Fukushima Daiichi complex, announced that substantial quantities of the radioactive waste water that had been used to extinguish the 2011 fires at the plant had been leaking from one of the 1,000 huge tanks that Tepco had installed at the site adjacent to the shoreline, raising immediate concerns that not only the surrounding soil but groundwater and nearby ocean water could soon become contaminated. Indeed, since the tanks were designed with only a five-year useful life, it appears to be only a matter of time until Tepco is forced to release most the contaminated water into the sea, which supports the large fishing industry that is a staple of Japanese life and diet.

On Aug. 23, Tepco indicated that this deferred problem has now reached crisis proportions and that there is no reliable way to check on the levels of the more than 400,000 tons of radioactive water in its tanks, which were constructed without water level gauges and with rubber sealing that is vulnerable to leaks, and no reliable way to transfer the contaminated water to other vessels. In addition, there is considerable evidence that contaminated water is leaching out from under the melted-down reactors and causing elevated levels of radioactive cesium in nearby ocean waters, producing what one senior Japanese government scientist called "the ultimate, worst-case scenario"—and one that has potential implications for both Japanese and other consumers of seafood from the western Pacific.

Conclusion

The proposed Keystone pipeline extension would have both local environmental risks in the United States (and Canada) and global climate change impacts that outweigh its very modest energy security and economic benefits for the United States. The continuing contamination of both local and global resources by the 2011 Fukushima Daiichi accident demonstrates that nuclear power, which could, in appropriate cases, promise energy security and economic growth without significant climate impacts, poses other substantial environmental risks to the earth's common resources (and to neighboring states) and cannot be responsibly pursued absent far more stringent controls and regulation than now exist in the international community. 


Stephen L. Kass is a partner and codirector of the environmental practice group at Carter Ledyard & Milburn. He is an adjunct professor at Brooklyn Law School and at NYU's Center for Global Affairs. Law students Matthew James, and Adam Shamah assisted in the research for this column. 

Reprinted with permission from the September 18, 2013 edition of the New York Law Journal © 2013 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com or visit www.almreprints.com.


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