The "Significance" Trap: New Economic Analysis Finds that Keystone XL Would Increase Tar Sands Production, Carbon Emissions

Introducing the report on a call to reporters Thursday, Tom Steyer, founder of NextGen Climate, who stated that he did not fund the research, called Keystone XL “the economic key to unlocking the tar sands and significantly expanding production, which would have major consequences for our climate.”  Steyer explained that the State Department analysis “didn’t fully consider how the pipeline would impact the economics of tar sands extraction for producers,” an omission that the Carbon Tracker Initiative researchers set out to address.

Mark Fulton, a former economist with Deutsche Bank and one of the report’s authors, said on the call that the State Department’s biggest mistake was assuming that all of the transport capacity of the Keystone XL pipeline would be replaced by the construction of other new pipelines, the expansion of existing pipelines, or by rail. Fulton explained that the true economics of transport costs don’t back up that assumption.

The economic analysis is a bit complicated, but basically reveals that the price of oil would have to be higher in order to make shipping by rail profitable, a fact that the State Department’s assessment failed to consider.

The "Significance" Trap:  New Economic Analysis Finds that Keystone XL Would Increase Tar Sands Production, Carbon Emissions