Hillary Clinton says no to Keystone XL: Does it matter?

TransCanada's Keystone XL pipeline has lost its last big Democratic supporter. After dodging questions on KXL and then trying to coax the Obama administration into finally making a decision, Hillary Clinton gave up waiting and announced that she is opposed to building the pipeline.

Industry has found workarounds to long-delayed pipeline

TransCanada's Keystone XL pipeline has been a controversial project in both the United States and Canada. (Tony Gutierrez/Associated Press)

TransCanada's Keystone XL pipeline has lost its last big Democratic supporter. After dodging questions on KXL and then trying to coax the Obama administration into finally making a decision, Hillary Clinton gave up waiting and announced that she is opposed to building the pipeline.

It's absolutely political, she must really be worried.- Michal Moore, University of Calgary

"I think it is imperative that we look at Keystone pipeline as what I believe it is," said Clinton. "A distraction from the important work we have to do to combat climate change."

There's no question that this is political.

"It's absolutely political, she must really be worried," said Michal Moore, an expert on energy and environmental policy at the University of Calgary's School of Public Policy. "When the State Department was under her control, they were signalling all kinds of different outcomes."

Clinton had been inclined to approve

It had been widely expected that if Clinton wins the presidency, she would approve the pipeline.  In 2010, while Clinton was still secretary of state, she said that she was inclined to support KXL, saying that it was either dirty oil from Mexico or dirty oil from Canada.

OK, that's not a rousing recommendation, but it was still viewed as a positive.

But now that the pipeline has no support from any major Democratic nominee for U.S. president, the question becomes: Does it matter?

The answer is no. At least for now.

"I think we've crossed over that line in the sand," said Robert Mark, an energy analyst with 3Macs. "This thing has been so delayed, TransCanada for so long didn't have a plan B and was fighting tooth and nail. But as it dragged on more and more, they moved to their plan B, which is [the] Energy East [pipeline]."
Environmental opposition to Keystone XL wasn't able to slow down development of the oilsands, but the oil price crash has. (Damian Dovarganes/Associated Press)

Market did what environmentalists couldn't

The goal of the environmental opposition to Keystone XL was to slow down the growth of Alberta's oilsands.

However, the industry simply found other ways to get oil to market — less efficient way, more expensive ways — but the oil continued to trickle down to the U.S. refiners, by rail, and by more circuitous pipelines.

The amount of Canadian oil being refined at Gulf Coast refiners — the end point of Keystone XL — has tripled since 2008, when TransCanada first announced the pipeline.

But the market ended up doing the job the environmentalists could not. In June, the Canadian Association of Petroleum Producers (CAPP) cuts its forecast for oilsands growth over the next 25 years by 30 per cent. 

"We're able to move the amount we're generating out of the oilsands today," said Moore. "We're doing fine."

"It's the future capacity, that's an issue." 

The energy industry will see this as a blow. The official position of CAPP is that all market access is needed, east, west and south, so that Canada can remain a player in the global oil market.

Alberta's rules could be changing

But the future growth of the oilsands remains in question. Capital investment is one part of the equation; the regulatory environment is the other.

When oil prices improve, will Alberta's NDP government be as keen to sell new oilsands leases? Will they be as likely to approve expansions and new projects? Will they promote bitumen leaving the province?

Alberta Premier Rachel Notley made the point just this week that she wants more bitumen to be upgraded and refined in the province. In an interview with the CBC's Anna Maria Tremonti, Notley said she didn't want Alberta's oil to be shipped to the U.S to be upgraded and refined.

"I'm not really in the business of creating jobs in the Gulf Coast. I care about creating job for Albertans."

What's next?

The future of Keystone XL now depends on the next U.S. presidential election. The Obama administration has hinted that it will make a call on the pipeline before the end of its term in 2016. If that does happen, the answer will almost certainly be no. 

But that does leave the door open for TransCanada to simply reapply under the next administration. After all, the Republican front-runner, Donald Trump, has said he's in favour of the pipeline. 


Tracy Johnson

Business reporter

Tracy Johnson is the executive producer of CBC's western digital business unit. She's been a business reporter/producer with CBC on radio, television and online for 15 years. @tracyjohnsoncbc


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