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Trump Brings the Keystone Pipeline Back from the Dead

Trump Brings the Keystone Pipeline Back from the Dead

Five days into office, President Donald Trump has already begun to peel back his predecessor’s legacy through a flurry of executive orders. And controversial oil pipelines are his next target. On Tuesday, Trump signed two executive actions to allow the construction of the Keystone XL Pipeline and the Dakota Access Pipeline, a major reversal of former President Barack Obama’s energy and environmental decisions and a blow to climate-change campaigners.

Trump signed the executive order in the Oval Office surrounded by cameras, heralding a new era of deregulation for U.S. (and Canadian) fossil fuels. “I am, to a large extent, an environmentalist,” Trump actually said at the White House on Tuesday.

“But it’s out of control, and we’re going to make a very short process and we’re going to either give you your permits or we’re not going to give you your permits,” he said, appearing to refer to governmental approval after environmental reviews. Keystone went through years of agonizing environmental reviews by the State Department, which ultimately suggested approving it.

But in November 2015, President Barack Obama scuttled Keystone, meant to bring sludgy, tar-like oil from Canada to U.S. refineries on the Gulf Coast, after fervent lobbying from environmental groups. Canada’s tar sands emit more greenhouse gas emissions in production than regular crude oil does. Obama also halted in September the U.S.-based Dakota Access Pipeline, which would carry North Dakota oil to shipping facilities in Illinois, after heated protests over fears the pipeline would harm Native American land and cultural sites.

Trump’s announcement may be a glimmer of good news for Canada amid prospects of a bumpy U.S.-Canadian relationship under the new administration (see: NAFTA). Canada needs the United States to keep its oil industry afloat. “Ninety-nine percent of Canadian oil exports are processed in U.S. refineries,” said Afolabi Ogunnaike, Senior Research Analyst at energy research firm Wood Mackenzie. And geography has bottlenecked most Canadian crude, extracted primarily in the land-locked and rugged province Alberta, from any easy export route beyond the United States. Restarting the Keystone pipeline would be a major win for Canada’s oil industry.

Still, questions abound. Canada was building an alternative pipeline to take tar sands oil for export to Canada’s Atlantic coast — and may not need both pipelines. And the rebounding U.S. oil patch is poised to increase production, which could squeeze out some Canadian imports.

Further, it remains unclear how the Canadian company overseeing the project, TransCanada, or Canada itself, would benefit from the pipeline. Trump indicated he would renegotiate the terms of the Keystone agreement to better benefit American industries — a common theme of Trump’s “America First” creed. “We are going to renegotiate some of the terms,” Trump said on Tuesday. “We will build our own pipelines. We will build our own pipes,” he said in apparent reference to a project initiated and financed by a Canadian firm. Ogunnaike also said border taxes, something Trump has pushed for in his protectionist trade agenda, could hurt Keystone pipeline profits.

Trump’s executive action sparked an immediate rebuke from environmental groups. “Keystone, the Dakota Access Pipeline, and fossil fuel infrastructure projects like them will only make billionaires richer and make the rest of us suffer,” Greenpeace executive director Annie Leonard said in statement released on Tuesday.

Industry groups predictably praised Trump’s decision to unblock the regulatory-laden projects. “The Keystone XL pipeline was under review for an unprecedented nine years and the Dakota Access pipeline was 90 percent completed when both projects were stopped,” Karen Harbert of the U.S. Chamber of Commerce said in a statement released on Tuesday. “These two projects will create good American jobs and improve access to affordable energy.”

Photo credit: NICHOLAS KAMM/AFP/Getty Images