Biden is facing a major confrontation with Canada in his first days in office

Karen Ho
Updated ·3 min read
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US president-elect Joe Biden plans to cancel the Keystone XL pipeline permit, the fourth phase of a major oil transportation system between Canada and the US, by executive order during his first day in office. Canadian politicians are already expressing their concerns about how it could affect the country’s economy.

The cross-border project’s cancellation appeared on a list of actions for his first day that was shared with US stakeholders over the weekend and “widely circulated,” according to the Canadian Broadcasting Corporation (CBC) News.

Biden’s decision on Keystone XL is part of a number of other environmental policies the incoming president plans to implement during his first day on the job, including re-joining the Paris Climate Agreement. President Donald Trump withdrew from the landmark initiative in November of last year.

“It’s very symbolic to cancel a project that’s been beset by problems for many years and has no place in the vision the Biden Administration has about [the US] transitioning to a clean energy future,” said Steve Melink, founder and CEO of green energy supplier and consulting company Melink Corporation.

News of the cancellation is especially painful for the provincial government of Alberta. In addition to an existing agreement to invest approximately $1.5 billion in equity in the project along with billions in loan guarantees, construction of the Canadian section of Keystone XL has already been underway for several months, according to CBC News.

A complicated political history

Keystone is a multi-billion dollar oil pipeline system that transports Canadian crude oil to refineries, oil tank farms, and a distribution center in the US. It was first proposed by the Calgary-based TC Energy Corporation in 2005. After the Canada’s National Energy Board approved it in 2007, several phases were constructed between 2010 and 2016. The fourth XL phase, estimated at $8 billion, would connect terminals in Hardisty, Alberta, and Steele City, Nebraska using a shorter route and a larger diameter pipe to transport both Canadian and American-produced oil.

The project has been promoted by both American and Canadian politicians as an important source of jobs and economic growth. In addition to the temporary nature of those construction jobs, critics and lawmakers have repeatedly cited environmental and safety concerns about possible leaks and spills—especially to the Ogallala Aquifer, a major source of freshwater spanning eight US states—as well as higher greenhouse gas emissions.

Keystone XL was rejected in 2015 by President Barack Obama’s administration over environmental concerns, including its controversial routing over an area known as the Sandhills, a national natural landmark in Nebraska.

Trump signed a memorandum to revive the Keystone XL pipeline during his first week in office in January 2017, and he signed a permit granting its construction in May later that year. The estimated transportation capacity from the addition of Keystone XL between the Canadian province of Alberta and the US Gulf Coast was “more than 800,000 barrels per day of heavy crude”.

Canadian Prime Minister Justin Trudeau, who has publicly support the project for several years, including at a major US energy conference in 2017, reiterated his support for the project at a news briefing today.

Canada has already invested a lot

Alberta premier Jason Kenney issued a statement online Jan. 17, reiterating the claims Keystone was an important part of US-Canada relations and reducing the need for foreign sources of oil. He also said the province would work with TC Energy, the company which owns the pipeline, to “use all legal avenues to protect its interest in the project.”

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