November 9, 2015

What the Keystone Pipeline Rejection Means

President Obama (finally) rejected the Keystone pipeline application on Friday. It took just 7 short years. I went on Bloomberg TV an hour after the press conference to comment on the move. See the clip here.

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I covered some of my main points on the show, and I’ve written about Keystone before. But this was a big shift in the discussion, so here’s my quick summary of the key takeaways from the announcement…

What was the pipeline battle about?

- It was never really about economic growth for the US. The best estimates said the project would only create 30-50 lasting jobs. And if we’re going for growth, clean energy is where we’ll find it.

- This battle was always about forcing a critical discussion about energy priorities. A single pipeline is not likely make-or-break for our climate. The question the anti-pipeline movement was asking was whether a world leader from a major economy could choose to move away from investment in and support for fossil fuel infrastructure… and thus pivot toward the clean economy. This is really the first time it's happened, and it’s a major victory for civil action/disobedience on climate issues in general, and for activist/professor/writer Bill McKibben in particular. See his incredible – and very quickly produced – video about the movement.

Why did the President reject it now?

- Most likely this was to give Obama a strong hand at COP21, the mega climate meeting happening in Paris in a few weeks. Taking a stand on this issue – along with his other executive branch moves on energy efficiency and power plant emissions – positions the U.S. as a leader in the global negotiations. The President is also bringing with him in spirit a large, growing number of companies that are committing to major reductions in energy use and use of renewables. A few weeks ago, 81 mostly very large companies stood with Obama signing the American Business Act on Climate Pledge.

What does this mean for fossil fuel companies?

- Fossil fuels are increasingly under attack. Exxon is facing possible legal action about what it knew on climate science, when it knew it, and how much it did to make the world believe it wasn’t a problem.

- In addition, if Keystone is an indication of a move from support for fossil fuels, then it’s an indicator of the prospect of “stranded assets,” – i.e., the idea that half or more of fossil fuel reserves that are sitting on energy company balance sheets will need to be left in he ground (I discuss it at 3:40 in the Bloomberg clip).

In total, this was both anticlimactic and a big deal. The President’s decision ends this chapter in the climate fight, at least for now.

(Andrew's book, The Big Pivot, was named a Best Business Book of the Year by Strategy+Business Magazine! Get your copy here. See also Andrew's TED talk on The Big Pivot. Sign up for Andrew Winston's blog, via RSS feed, or by email. Follow Andrew on Twitter @AndrewWinston)

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