Impact of the Keystone XL pipeline on global oil markets and greenhouse gas emissions

This study recognises the contribution of supply-side infrastructure in locking-in carbon and impacting global greenhouse gas emissions. The study applies economic modelling to understand the implications of the Keystone XL pipeline on greenhouse gas emissions by virtue of the pipeline’s potential to increase oil sands production (resulting in potential increases to global oil consumption). 

Specifically, the study determines the overall greenhouse gas emissions impact of the pipeline based on the extent to which the pipeline increases oil sands production. It simulates the interaction between global oil supply and demand for 2020, drawing a global oil supply curve from Rystad Energy. The study uses a long-run elasticity of 0.13 for supply and of 0.20 for demand, resulting in an increase of 0.59 barrels of oil consumed for every barrel of increased production.  

The study finds that the construction and operational emissions of the pipeline are minor. However, it finds that the net annual impact of the pipeline could range from none to 110 million tons CO2 equivalent every year. This assessment is significantly more than the impact of the pipeline as assessed by the US State Department due to its consideration of changes in global oil consumption from increased oil sands production. 

The study reflects an approach to economic modelling that could be used to assess the impacts of other fossil fuel supply infrastructure. It can be used to demonstrate the adverse effects of all supply-side infrastructure on global greenhouse gas emissions, even where that infrastructure solely relates to transportation rather than extraction activities. By demonstrating the effects of supply-side infrastructure, the study can be used to show how greenhouse gas emissions could be avoided if supply-side infrastructure is not approved.