Keystone XL pipeline cancelled after Biden scraps US permit

Construction of the controversial Keystone XL pipeline was officially terminated on Wednesday, handing a big victory to environmentalists that had fought the project for more than a decade as they intensify their battles against other fossil fuel development.

The decision by TC Energy and the government of Alberta to pull the plug on the $8bn pipeline had been widely expected after Joe Biden scrapped the permit to build its US leg in one of his first acts as president.

“We remain disappointed and frustrated with the circumstances surrounding the Keystone XL project, including the cancellation of the presidential permit for the pipeline’s border crossing,” said Jason Kenney, Alberta premier.

The project, which would have carried bitumen from the oil sands of northern Alberta to Gulf Coast refineries, had faced opposition from the outset and became symbolic of the political stand-off over the future of fossil fuels in the US.

It was blocked in 2015 by then-president Barack Obama who said it would undermine US attempts to address climate change. But Donald Trump signed an order to push it forward during his first week in office. Biden’s decision to revoke the permit fulfilled a pledge made on the campaign trail.

In Canada, where politicians had lobbied to keep the project alive, Biden’s decision was greeted with dismay. This was especially true in Alberta, where the province had taken a $1.1bn stake in the project and lent TC Energy another $4.7bn to pay for construction. Some 150km of the pipeline had already been installed in the Canadian province.

The project employed about 2,500 people in the US and Alberta during the peak of construction last year. But building activity had been suspended since Biden’s decision to scrap the permit. 

Production from Canada’s ultra-heavy oil deposits is more carbon intensive than most other forms of crude, making Keystone a target for environmentalists, who argue new pipeline projects encourage continued fossil fuel production at a time when the world needs to slash its emissions.

“Keystone XL has been a symbol for the challenges the sector has faced in getting high-profile projects permitted and built not just in western Canada but across North America,” said Moody’s analyst Gavin MacFarlane.

Other pipeline projects have also faced serious opposition. Enbridge’s Line 3 expansion, which would also carry more Canadian oil south, has seen clashes between environmentalists and police in recent days. And the future of the Dakota Access pipeline, which transports oil from the Bakken shale patch in North Dakota to the rest of the US, remains undecided after a judge ordered a further environmental review.

Utilities Dominion Energy and Duke Energy last year scrapped the $8bn Atlantic Coast Pipeline project after protracted litigation and delays sent costs soaring.

Wednesday’s capitulation was welcomed by environmental groups, who vowed to continue the fight against pipelines in other parts of the US.

“The fight to stop Keystone XL was never about one pipeline,” said Kendall Mackey, campaign manager at 350.org. “The termination of this zombie pipeline sets a precedent for President Biden and polluters to stop Line 3, Dakota Access, and all fossil fuel projects.”

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