Can Canada sell Biden on Keystone 2.0?

Joe Biden was in the White House when Barack Obama tried to kill the Keystone XL pipeline. Should the Democratic contender return as president, he's vowed to finish the job — unless Canada can convince him otherwise.

As Keystone supporters look toward a potential Biden presidency, finding a way to keep the pipeline construction moving with the support of the U.S. is their top priority.

"I think it’s always worth trying when it’s a project that’s in the national interest," Gerald Butts, a former top aide to Canadian Prime Minister Justin Trudeau who's now at the Eurasia Group, said in an interview, of trying to sell Biden on the project. "I'd just be clear-eyed of probable outcomes.”

Alberta Premier Jason Kenney hopes that ongoing construction on the cross-border pipeline will make it harder to yank the presidential permit. To that end, Alberta announced in May that it had taken a C$1.5 billion equity stake in the project.

"I cannot imagine that a U.S. president eight months from now, nine months from now, would require that thousands of miles of pipe be pulled out of the ground by the union workers who are now employed creating that project," Kenney said in May.

Opposition to Keystone among Democrats has only grown since Obama left office, Butts said, and Biden is campaigning on a push toward renewable energy. "I would transition from the oil industry," the former vice president said during his final faceoff with Trump last week.

“So I think it’s going to be a very tough sell," said Butts, who helped to direct Trudeau's policy agenda, including Canada's climate change plan.

The Keystone XL pipeline remains a bilateral bugaboo more than 12 years after it was proposed. President Donald Trump campaigned on a promise to approve the project, but four years on it remains mired in legal challenges and political controversy in the U.S.

The project long ago became a symbol of the battle between current energy demands and the future of the climate. For some in Canada, the pipeline has become a litmus test of the Canada-U.S. relationship.

For Trudeau, it is one more place where he must attempt to balance his climate aspirations with the country's need to export one of its most valuable natural resources. He has touted Alberta's and Canada's actions to curb carbon pollution from the oil sands, such as the province's carbon pricing system for large industries, when speaking of his support for projects like Keystone.

Energy analysts say that by the early 2020s Canada needs two of three pipelines to transport crude to market from Alberta — Keystone XL to the Gulf, Line 3 to the Great Lakes and the Trans Mountain expansion to the Pacific Ocean via British Columbia.

Regulatory pressures in Minnesota for Line 3 and ongoing Indigenous protests against Trans Mountain mean it’s unlikely the Trudeau government will back off its advocacy for Keystone XL, especially given political tensions in western Canada. The prime minister has tried to pursue climate action while promoting pipeline options to keep the country's oil industry above water.

Biden is on record opposing Keystone, pledging he would rescind the permit that allows developer TC Energy to build the pipeline across an international border. That move would effectively kill the project.

“Biden strongly opposed the Keystone pipeline in the last administration, stood alongside President Obama and Secretary Kerry to reject it in 2015, and will proudly stand in the Roosevelt Room again as President and stop it for good by rescinding the Keystone XL pipeline permit,” Biden campaign policy director Stef Feldman said in a written statement to POLITICO in May.

Still, some Canadian political observers say there's reason to believe Biden could be persuaded to keep Keystone on the books.

While Obama and Trudeau’s predecessor, Conservative Stephen Harper, didn’t necessarily share a warm relationship, the tides turned after the Liberal leader was sworn in in November 2015, despite the president’s rejection of Keystone just two days later.

Months later, Obama hosted Trudeau, his wife and myriad government officials at the White House for the first official state visit and dinner in nearly two decades. By the end of 2016, Biden was flying to Ottawa in a snowstorm for a farewell state dinner where he implored Trudeau to maintain the “liberal international order.”

“Sometimes public policy can be accomplished simply because two people get along,” said Gary Mar, a former Alberta government official who’s now president and CEO of the Canada West Foundation. “It happens when people are more interested in solving a problem than winning an argument.”

Ongoing legal challenges to federal permits have stymied the pipeline's progress in the U.S., where construction was limited to roads, workforce camps and pump stations. Meanwhile, construction began on the Alberta portion of the project over the summer, and the portion of the pipeline that crosses the international border was completed in May.

James Rajotte, Alberta's representative in the U.S., has spent the past few months pressing his province's case to influential Democrats who may not be up to speed on the province's climate policies. And Canadian Ambassador to the U.S. Kirsten Hillman has long pushed the pipeline's upsides in Washington. TC Energy spokesperson Terry Cunha touted its recent agreement to build the pipeline's American portion with an all-union workforce, "which will create thousands of construction jobs."

Keystone XL supporters argue that the project has evolved since Biden last served in the White House. Both Canada and Alberta have instituted policies to cut carbon pollution from energy-intensive industries and Indigenous communities are on the cusp of an equity stake in the pipeline. The pandemic-induced recession also opens opportunities for Canada and the U.S. to pursue economic recovery in tandem, which could involve cooperation on energy issues.

“Even as we move away from a fossil-fuel dominated economy, we’re going to need fossil fuels for some time,” a point Biden has acknowledged in his position on fracking, said Roland Paris, a former foreign policy adviser to Trudeau. Ottawa could propose bilateral climate initiatives with a Biden administration that “could help put the Keystone project into its proper context” and perhaps “strengthen Canada’s case.”

“There’s a lot to be said for working together on supply chain security, and on a continental environmental program, and on the economic recovery of the continent after this Covid shock,” Paris added.

Alberta’s work to make the oil sands industry less carbon-intensive — and recognition that attracting capital to those companies means intensifying those efforts — makes it easier for Biden to back off his pledge, Mar said.

Plus, the Alberta government’s equity investment in Keystone XL “changes the circumstances in the sense that it is now a government-to-government sort of project, as opposed to a U.S. government to private sector one,” he said.

Still, project supporters continue to rely on many of the same arguments that were used during the past decade — that Keystone would bolster North American energy security, that the U.S. should want to buy heavy oil to stock its Gulf Coast refineries from an ally rather than a politically unstable seller like Venezuela — and seemingly failed to break through.

Biden will also have to contend with the Democratic Party’s left flank, whose fingerprints are visible on his $2 trillion clean energy plan. He has spent the past few months walking a fine line on energy and climate, trying to stay in the good graces of both moderate and progressive voters — touting his proposal as an economic recovery plan while disavowing the "Green New Deal" and inaccurate claims that he’ll ban fracking.

A Biden campaign spokesperson pointed to Feldman’s statement from May when asked if Keystone is a settled issue for the Democratic contender.

“I would take that as a policy statement right now and assume that’s how he’s going to move forward,” said Bruce Heyman, a former ambassador to Canada under Obama.

Canada’s best hope, then, may be that Biden doesn’t follow through on his promise in the early days of his presidency, giving Ottawa and Edmonton time for some neighborly diplomacy. That may not be a tall order, given the all-consuming Covid-19 pandemic and its economic impact. Restrictions on the Canada-U.S. border are likely to still be in place in January, which would be another pressing issue to address.

Biden would be able to revoke Keystone’s cross-border permit with the stroke of a pen. The Trump executive order that granted it states that it "may be terminated, revoked, or amended at any time at the sole discretion of the President."

Still, he may find it easier to let court challenges play out. If U.S. federal courts rule against the pipeline, his administration could slow down the project by requiring it to clear tougher environmental hurdles, said Christi Tezak, an analyst at ClearView Energy Partners.

"The proverbial ‘death by a thousand cuts’ may be as effective as a rifle shot revoking the cross-border permit,” she said. “Depending on where demand settles and the progress on competing options such as [Enbridge's Line 3 replacement] and Trans Mountain, ‘slow’ could work as well as ‘no’ at the border for stopping the pipeline.”

What remains to be seen is, should Biden win and later cancel Keystone, if Trudeau will shoulder the blame years after Harper vowed Canada won’t “take no for an answer” on the pipeline. The Keystone XL debate is one in which Trudeau’s perceived influence with Democrats could affect his political standing in a country that has largely applauded his handling of Trump.

A U.S. rejection of Keystone XL would spotlight just how important the Trans Mountain project is to Canada and its goal of diversifying markets for its exports, Butts said.

“TMX gets you that, but KXL does not," he said.

Ben Lefebvre contributed to this report.