Climate Crisis: COVID-19 Cancels COP26, KXL Construction, Trump Big Oil Huddle
Welcome back to TRNN’s Climate Crisis News Roundup. In the coming weeks, this column will focus on the intersection between COVID-19 and the climate crisis.
Global Climate Summit Cancelled
Though not scheduled until November, the United Nations Climate Change Conference (UNFCCC)—known by many as the Conference of Parties (COP) 26—will not happen in 2020. It’s another casualty of COVID-19. Worldwide, as of April 7, almost 70,000 people have died from the virus and there are more than 1 million cases globally.
The summit brings together leaders and diplomats from around the world to negotiate global climate agreements. The 2020 edition was viewed by many as a landmark “last chance” to hammer out a deal, though past summits have frequently received such billings with little of substance to show for it. That’s a topic for another day.
“In light of the ongoing, worldwide effects of COVID-19, holding an ambitious, inclusive COP 26 in November 2020 is no longer possible,” the UNFCCC said in a press release. “Rescheduling will ensure all parties can focus on the issues to be discussed at this vital conference and allow more time for the necessary preparations to take place. We will continue to work with all involved to increase climate ambition, build resilience, and lower emissions.”
Though this gives global inaction on the climate crisis an additional year to continue unchecked, COVID-19 has one silver lining: lowered global greenhouse gas emissions, offering a glimpse at a world with fewer vehicles on the road, airplanes in the air, and cruise ships spewing dirty fuel oil into the sea. We reported on this in last week’s edition of the roundup.
Nicholas Stern, the former chief economist at the World Bank who studies the global economic impacts of a worsening climate crisis at the London School of Economics, said that the looming, deep economic recession may ideally lead to the world’s countries brokering something akin to an international Green New Deal.
“There is an opportunity in the recovery from the COVID-19 crisis to create a new approach to [economic] growth that is a sustainable and resilient economy in closer harmony with the natural world,” Stern told The Guardian. “That will be the challenge and opportunity of COP 26 next year. We must use this time well.”
Keystone XL Construction
On the same day that President Trump said COVID-19 could lead to a minimum of 100,000-240,000 deaths in the United States, the owner of the long-contested Keystone XL pipeline—TC Energy, formerly known as TransCanada until a recent corporate rebranding—announced that it would soon begin construction of the transnational line. Activists have called the pipeline a “carbon bomb” to carry Alberta’s tar sands to the Gulf of Mexico refinery markets. The tar sands, an oil more dense in substance than conventional crude, are among the most carbon-intensive petroleum products in North America.
Pipeline construction is slated to bring an estimated 830,000 barrels per day of tar sands oil extracted from Alberta, Canada across the United States upper midwest, through its rural heartland, and down into Oklahoma and Texas. The fight over the pipeline has persisted since the end of George W. Bush’s second term as president. Since it was first proposed more than a decade ago, Keystone XL has faced direct action campaigns, highly visible civil disobedience tactics, state and federal court battles, and fights at nearly every level of bureaucracy.
In 2015, President Barack Obama nixed Keystone XL after his administration signed an executive order greenlighting the pipeline’s southern leg, rebranded as the Gulf Coast Pipeline, in 2012. But in March 2017, President Trump reversed Obama’s 2015 decision by signing a presidential permit allowing the pipeline to run across the Canada-United States border. Years have passed, and industry analysts were not sure if market demand for the pipeline continues to exist. Since the Keystone XL debate began, TC Energy built out a system bringing tar sands crude down to Gulf of Mexico refineries by moving forward on the Keystone Pipeline System’s first three phases (Keystone XL is phase four of that system). TC Energy’s pipeline industry corporate competitor Enbridge, as previously covered by The Real News, has also built out a “Keystone XL Clone,” achieving that same end.
By taking advantage of activists unable to protest in public, TC Energy has exploited the global pandemic as a quiet and convenient business opportunity. After landing a $4.2 billion loan guarantee from the Alberta government, the company announced it would soon begin construction of the line. TC Energy will also benefit from a $1.1 billion equity stake that the Alberta government has purchased in advance of constructing the pipeline. Citibank and JPMorgan Chase also announced on April 2 that they’d put forward a $1.25 billion bond for construction of the pipeline.
“We cannot wait for the end of the pandemic and the global recession to act. There are steps we must make now to build our future focussed on jobs, the economy, and pipelines. Today we are moving forward with a project that is essential to our future prosperity,” Alberta Premier Jason Kenney said at a press conference announcing the decision. “This investment in Keystone XL is a bold move to re-take control of our province’s economic destiny and put it firmly back in the hands of the owners of our natural resources, the people of Alberta.”
The Alberta government made the investment decision after the price of tar sands oil had dropped to a record low $4 per barrel. Just three days before the Keystone XL decision, Kenney announced layoffs for 6,000 substitute teachers and up to 20,000 support staff in the province’s schools—26,000 in total.
TC Energy CEO Russ Girling praised both the U.S. and Alberta governments after the announcement of the Alberta government investment decision in a company press release. He added that the company would take necessary precautions to ensure its workers would not spread COVID-19 to the communities situated along the 1,210-mile pipeline.
Prime Minister Justin Trudeau’s administration also praised the deal.
“The Government of Canada has always been a strong supporter of Keystone XL. The project increases our market access—safely, responsibly, and sustainably—and fits within Canada’s climate plan,” said Seamus O’Regan, Trudeau’s Minister of Natural Resources, in a press release. “I commend the Government of Alberta on providing equity support and loan guarantees. These will help to ensure the success of the project.”
Bill McKibben, author, activist, and founder of 350.org, the group that has long led the fight against Keystone XL, blasted the decision to proceed with the pipeline in the midst of the COVID-19 global pandemic.
“This is capitalism at its most naked: willing to endanger people in the COVID-19 crisis and to heat the earth in the climate crisis, all in search of a bit more profit,” McKibben wrote in The New Yorker. “In a world running right now on bravery and love, it’s hard to imagine anything much darker.”
For what it’s worth, the credit ratings agency Moody’s wrote that “We do not assume that the project will be completed” in a March 31 analysis.
“The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets,” wrote Moody’s. “The combined credit effects of these developments are unprecedented. Among the challenges is the potential for the outbreak to disrupt and delay large construction projects like Keystone XL.”
Trump, Big Oil Huddle
On April 3, Trump huddled with executives of companies and lobbying organs including American Petroleum Institute, ExxonMobil, Continental Resources, Chevron, and Energy Transfer Partners. They came to the White House seeking an economic stimulus package, a balm against the plummeting global price of oil.
“Between salaries, bonuses, stock options, and other compensation, these executives earned at least a combined $100 million in 2018 alone,” wrote Greenpeace USA in an article offering background research on the executives who sojourned to the White House. “But they’re in Washington to ask for relief after oil prices plummeted to around $20 per barrel this week.”
President Trump described the meeting in glowing terms to the press in its aftermath.
“The virus has just stopped demand of everything, including oil,” he said. “So we’re working with our great energy companies. These are great companies. They employ tens of thousands, hundreds of thousands of people. And they’ve kept America really going for a long time…And now they got hit. But with all the jobs and all of the good that they do, we’re going to make sure that they stay in good shape.”
In recent weeks, a major split has emerged between independent oil and gas drillers focused primarily on fracking in U.S. shale basins and global oil majors. The oil majors, or Big Oil, oppose a bailout. Companies heavily leveraged to do fracking seek government aid.
The meeting appears to be an attempt by Trump, a major recipient of campaign contributions from Energy Transfer Equity CEO Kelcy Warren and Continental Resources Executive Chairman Harold Hamm, to bring the two sides together. Hamm served as an energy aide during Trump’s 2016 run for the presidency, while Warren—whose company owns the Dakota Access Pipeline—was one of his top individual donors within corporate America.
Saudi Arabia has ramped up oil production, which—alongside COVID-19 and the downturn of the world’s major economies—has aided in the tanking of the global price of oil. In response, U.S. Sen. Kevin Cramer (R-ND) has introduced a bill calling for the United States to remove its troops from Saudi Arabia in an attempt to deter the kingdom from continuing to pump out an economically destabilizing amount of oil.
Cramer, who attended the meeting with several other Republican Senators, highlighted the massive amount of money the United States spends for its military to protect the U.S. global oil supply in his remarks before the meeting. He did so by pointing to a 2018 report by the group Securing America’s Future Energy.
“It is estimated by one report in 2018 that we spent a minimum of $81 billion defending global oil supplies,” said Cramer, who then pivoted to Saudi Arabia. “We can use that money in national defense and other hotspots in the world, if our friends are going to treat us this way.”
The business publication Financial Times reported that independent companies are working with Rick Perry, former Secretary of Energy under Trump, to lobby for sanctions against Saudi Arabia. Speaking recently to Fox News show host Tucker Carlson, Perry said he would advocate for Trump to allow for the intake of only US-produced oil for a two to three month period for the country’s refineries.
“Here’s what I would do, and I would certainly give this advice to the president,” Perry, also a member of the Board of Directors of Energy Transfer Equity, told Carlson. “I would for the next 60-90 days … refine US crude [and] US crude only and that would give a buffer to the market and send a clear message that we are just not going to let foreign oil flow in here [and] bust our energy industry.”
Hamm’s Continental is one of the top oil producers in the Bakken Shale, while the Dakota Access Pipeline carries the field’s crude to Gulf of Mexico refineries and—increasingly—the global export market. The oil majors, however, enjoy joint venture relationships with Saudi Aramco: symbiotically refining the country’s crude as an imported product in the United States.
Saudi Aramco, too, owns a 50% stake in the Motiva oil refinery, the largest in the United States, which is also one of the biggest in the world. The shale industry is lobbying to halt crude oil from reaching that facility. The heads of the lobbying organizations American Petroleum Institute and American Fuel & Petrochemical Manufacturers wrote in a joint letter to President Trump dated April 1:
“[i]mposing supply constraints…would exacerbate this already difficult situation, jeopardize the short and long-term competitiveness of our refining sector world-wide.”
Greenpeace called the whole tit-for-tat and premise of the situation “disgraceful” in a press release:
“As the death toll from the COVID-19 pandemic rises, Trump is choosing to spend his time behind closed doors with people who made millions off destroying our planet,” said Janet Redman, a Senior Campaigner for the organization. “The best support we can give to workers and communities who depend on the fossil fuel industry isn’t a no-strings-attached corporate bailout, it’s a just transition to jobs in the sustainable industries of the future. That means guaranteeing pensions, benefits, and wage insurance; investing in job retraining opportunities; strengthening unions; and supporting community tax bases for an economy that will restore our environment rather than destroy it.”
That’s it for this week. Be safe out there, and if you can under almost all circumstances, stay at home. Thank you for reading and please come back next week for another edition of the Climate Crisis News Roundup.