The Central Flaw of the Keystone XL Economic Analysis

8:24 pm in Uncategorized by BruceMcF

Well, Sunday Train has the analysis of a couple of intercity rail projects in the queue, but for a weekly column devoted to renewable energy and transport issues to focus on some early stage preliminary analysis of an intercity rail corridor while ignoring the release of the updated final environmental impact analysis would be like some supposed weekend “in depth analysis” new show to ignore the release of that analysis in favor of covering the breaking news that New Jersey politicians play dirty (true story).

For those who have been following the process, the conclusions of the updated analysis are of little surprise, since they basically repeat the previous conclusion before the analysts ~ analysts connected to the oil industry, since, of course, they would know about this kind of stuff ~ were told to repeat the analysis. That is, to quote part of the Think Progress coverage:

The newly-released report admits to the obvious: that ‘the total direct and indirect emissions’ of the project ‘would contribute to cumulative global GHG emissions.’ But in its final analysis, it says the proposed pipeline is ‘unlikely to significantly affect the rate of extraction in oil sands areas,’ and does not look at the overall greenhouse gas emissions of the tar sands oil that would flow through it.

The underlying, unstated, premise of the entire environmental and economic impact is that we will in any event produce a large portion of the tar sands that are in the ground. And that implies, of course, that we are screwed: we have to adopt policies keep 80% of existing reserves of carbon based fossil fuels in the ground in order to have a prospect of keeping global warming under about three and a half degrees Fahrenheit and have at least some chance of avoiding the kind of catastrophic climate change that will eliminate the United States as a single national society and economy.

So the analysis, including unstated premise, is: “Assuming that the nations of the world do not impose adequate policies to avoid a catastrophe with costs that dwarf the entire presumed value of the tar sands deposits, this is the impact of building or not building the Keystone XL pipeline.”

But, what is the impact of building or not building the Keystone XL pipeline presuming that we do adopt policies that are adequate to keep 80% or more of current existing fossil fuel reserves in the ground? The analysis avoids that question entirely, even though the analysis delivers the numbers that allows use to evaluate those costs.

The Power of Status Quo Bias

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