What Is Obama Up To on Keystone?

Obama can’t vote “present” on the Keystone pipeline forever, though he can probably string it out a while longer.  He won’t want to punt it to the next president, though, because it might be a Republican who will approve it on Day One.  Maybe Obama could just propose an alternate route through Guantanamo, since Gitmo is going to need a new use soon, right?

Last month I predicted:

What Obama may do is tentatively approve Keystone along with a major policy shift that will please environmentalists and subject Keystone to further and perhaps fatal delays. There is talk that the administration may expand the scope of the National Environmental Policy Act (NEPA) to require that proposed projects like Keystone document their impact on global warming in the permit approval process.

About two weeks ago the Obama administration quietly and without fanfare took a step that might accomplish the double game of “approving” Keystone subject to conditions that mean it cannot be built.  Last week, the news dribbled out that the Obama administration, as a part of a seemingly minor rule-making about energy standards for microwave ovens, slipped in a recalculation of the “social cost of carbon” that could potentially tip the scales heavily against the Keystone pipeline—among other energy-intensive developments—in the course of the required cost-benefit analysis that subsequent rule-makings have to conduct.

Here’s how Bloomberg reported the story last week:

Buried in a little-noticed rule on microwave ovens is a change in the U.S. government’s accounting for carbon emissions that could have wide-ranging implications for everything from power plants to the Keystone XL pipeline.

The increase of the so-called social cost of carbon, to $38 a metric ton in 2015 from $23.80, adjusts the calculation the government uses to weigh costs and benefits of proposed regulations. The figure is meant to approximate losses from global warming such as flood damage and diminished crops.

With the change, government actions that lead to cuts in emissions — anything from new mileage standards to clean-energy loans — will appear more valuable in its cost-benefit analyses. On the flip side, environmentalists urge that it be used to judge projects that could lead to more carbon pollution, such as TransCanada Corp. (TRP)’s Keystone pipeline or coal-mining by companies such as Peabody Energy Corp. (BTU) on public lands, which would be viewed as more costly.

Combine this with stories, such as this one from Politico, that say Obama is getting ready to roll out some strong executive-based climate policies in July, and you can begin to connect the dots here.  Obama will be able to “approve” Keystone subject to further cost-benefit review, which will subsequently kill the project on cost-benefit grounds, or will impose such onerous “mitigation” costs on TransCanada that they have to withdraw their application.  Obama will be able to say he “let the process” go forward.

But the pathway might not be that easy.  Myron Ebell of the Competitive Enterprise Institute observes:

The President may be aiming for July, but I doubt that the administration will release anything before the Senate votes to confirm Gina McCarthy as EPA Administrator.  That’s because what the White House is likely to propose is a bunch of further rules regulating greenhouse gas emissions under the Clean Air Act.

White House climate czar Heather Zichal said as much when she spoke at the same conference Gore spoke at on Tuesday. “Our focus moving forward will be on executive actions.”  That is going to make many Senate Republicans angrier than they are now about unilateral administration actions and therefore more likely to try to block a vote on McCarthy’s nomination.

All I can add to this right now is that Power Line is polishing up a Green Weenie for Obama.  Meanwhile, memo to Senate Republicans: better sit on Gina McCarthy’s EPA nomination.

P.S.  Haven’t had time yet to check out this new microwave oven rule, but if it’s anything like the (non)-performance standards the government has imposed on light bulbs, dishwashers, and shower heads, better go out an stock up on replacement microwave ovens soon.


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