Compromising Engineers and the Keystone XL Pipeline

Jonathan Coopersmith teaches history at Texas A & M University.

Compromise may be a career-ending concept in politics, but it is essential in engineering.  Every day engineers have to balance legitimate and conflicting interests.  What makes a great engineer is not only the ability to find the best balance but also to convince stakeholders of the wisdom of that decision. 

To illustrate this concept, look at this drawing from a 1951 issue of Railway Age (that in 1951 railroad passenger cars were a commercially significant complex technology is itself another story).  Each of the 13 images of an ideal car shows the perspective of one group involved in the decision to design a car. 

All of those perspectives are valid and important:  Finance wants a car that makes money by carrying as many passengers as possible, maintenance wants a car that can be easily serviced, construction wants a car that is easy to build, and so in.  The challenge for engineers – because they usually work in teams – is to create and manufacture a railroad car that meets the conflicting needs and desires of all the stakeholders. 

So why drag designing railroad cars in the 1950s into the contemporary debate over the proposed 1179-mile Keystone XL pipeline from Hardisty, Alberta to Steele City, Nebraska to carry oil extracted from Canadian tar sands to American refineries?  Because Keystone XL has become political theater and fundraising fodder to the detriment of the actual proposal and serious discussion about energy policy.  An object of intense political posturing over the last few years, the pipeline has become a powerful symbol pitting environmentalists against petroleum promoters.   

There are significant environmental objections to the pipeline:  It will encourage further use of oil and extracting oil from the Canadian tar sands demands a lot of energy and produces high levels of carbon dioxide relative to the amount of oil produced.  Or, an as energy economist would say, tar sands have a low energy return on energy invested compared with drilling a well in Saudi Arabia. 

The pipeline, however, will increase long-term American geopolitical security by providing a major Canadian-American conduit for oil.  If built and maintained properly, the Keystone XL pipeline will reduce the cost and increase the safety of transporting Canadian oil:  Pipelines are much safer and less expensive than railroads as any resident of Boomer, West Virginia, where 3 million gallons of oil in 109 tank cars derailed in a flaming fury earlier this month, will testify. 

As Christopher Jones demonstrated in Routes of Power, a history of American energy infrastructure, successfully building pipelines demanded political as well as financial and engineering entrepreneurship.  Keystone was not the first nor will it be the last contested pipeline. 

So what would a compromising engineer do?  Or, in this case, what would the former director of the United States Geological Survey and current editor-in-chief of Science recommend?  Marcia McNutt suggested the federal government approve the Keystone pipeline in return for the Canadian oil industry reducing its carbon emissions.  The pipeline would be built but carbon emissions would not grow or even shrink. 

Currently, the Republican majorities in the House and Senate passed a bill authorizing Keystone XL.  President Obama has just vetoed the bill.  Everyone has stood up for their principles and political base.  Now, it is time for the President and Congressional Democrats to build on Dr. McNutt’s proposal and support the pipeline -- in exchange for Republican support of a carbon tax. 

This would be a grand compromise in the best engineering tradition with major benefits for the United States, Canada and the planet.  Keystone advocates and environmentalists will both win.  The former will get a productive, safe pipeline and the latter will gain a tool to offset the carbon produced. 

At its simplest a carbon tax taxes the amount of carbon a fuel burns.   The tax encourages low-carbon or no-carbon fuels, like natural gas and renewables, over high-carbon fuels like coal. 

Economists like a carbon tax because it sends a clear price signal to the market without distorting it like tax credits or subsidies.  Furthermore, a carbon tax is easy to administer and far less intrusive, regulatory and complicated than cap-and-trade markets.   It’s a simple free market solution and far less bureaucratic than regulations. 

For environmentalists, a carbon tax will ensure that the oil sent by the pipeline will be carbon-neutral; that is, the tax will lower overall fossil fuel consumption to offset the carbon dioxide generated by producing the oil from the tar sands. 

Texas A&M economics professor James Griffin has proposed such a tax should start low and slowly but publicly increase over time.  The low initial cost means any economic disruption will be small at first.  The gradual increase tells consumers – whether utilities or individuals – that the price of their energy from coal, oil or natural gas will definitely but slowly increase, giving them the certainty to plan ahead. 

Like any compromise, the politics will be challenging.  Republicans will have to accept the creation of a new tax while Democrats will have to accept that oil will continue to be a mainstay of the energy world for decades.  The only real loser will be the coal industry, which will be hardest hit.  Even then, a carbon tax will just accelerate the long-term trend of switching from coal to natural gas, wind, solar, nuclear and other more environmentally friendly and increasingly less expensive fuels. 

Trading a carbon tax for the Keystone XL pipeline is good energy policy.  Whether Democratic and Republican political leaders will seize the opportunity is another issue.  If they do, somewhere a passenger car designer will be smiling at the elegance of the compromise.