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In Response: Canadian oil can't compete with renewable electricity

From the column: "We don’t need TC Energy’s measly $2 billion (Keystone XL) pipeline and its fly-by-night pipeline jobs."

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Bob Englehart/Cagle Cartoons

The Jan. 30 commentary in the News Tribune, “Biden’s Keystone XL blunder still stings a whole year later,” left out a lot of context about whether we need more oil pipelines or fossil-fuel infrastructure.

For one, it failed to mention that TC Energy, the company that wanted to build the Keystone XL pipeline for $2 billion, is suing the U.S. government for a whopping $15 billion to compensate it for profits it planned to make with the pipeline. Under the old North American Free Trade Agreement, or NAFTA, TC Energy can literally extort money from an insufficiently pliable nation-state if said nation-state fails to do its bidding, while paying nothing for the climate damage from the oil. That should outrage every American from free trade agreement-hating supporters of President Donald Trump to climate activists.

In fact, TC Energy should be sending President Joe Biden, who canceled the project, a Christmas card because he saved them the expense of yet another fossil-fuel stranded asset.

The reason is that investors around the world are stunned by the speed with which consumers are switching over to electric vehicles. Enbridge has reduced the estimated economic life of its mainline pipeline system, though incongruously not Line 3, from 30 years to 20 years so it can more quickly recoup the cost to build it before the end comes. Under duress, the Biden administration held an auction for Gulf of Mexico oil and gas leases. Of the 80 million acres offered, only 1.7 million got any bids. Finally, oil and gas companies generally are shoving profits to investors instead of developing more oil fields.

All of this makes rational sense. We have sufficient experience with the adoption of clean-energy technology to know that these things follow an “S” curve. At first, technologies are purchased by first adopters. Then, enough scale is achieved by industry that a magic number is hit, somewhere in the neighborhood of 15% to 20% of sales. At this point, decreasing costs allow a near vertical adoption rate. Finally, market saturation is achieved and sales taper to a steady state.

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In the case of Norwegian electric-vehicle sales, it took 10 years to go from 1% of sales to 86% of battery-electric and plug-in hybrid vehicles. Then, it was the drivers of electric vehicles who were anxious about where to find charging stations. Now it is the late adopters who have no one to sell their fossil-fueled vehicles to and who are driving long distances to a dwindling number of gas stations.

How did they do it? Norway placed the social cost of fossil-fuel consumption over the life of a new vehicle on the sales price and used this carbon tax to make the electric vehicles less expensive. A perfect example of how carbon pricing works in the real world.

In the U.S., sales of electric vehicles are doubling annually and that exponential rate of growth appears to be accelerating. Sales were 2% of light-duty vehicles in 2020. By the summer of 2021, sales were 5%, and by the fourth quarter of 2021 sales were 11.8%.

Let’s face it, Canadian tar sands oil cannot compete with American renewable electricity, and TC Energy should not be rewarded for its lack of foresight and deficient business model.

Besides, we don’t need TC Energy’s measly $2 billion pipeline and its fly-by-night pipeline jobs. Ford is investing $11.4 billion and GM $7 billion in electric vehicles, resulting in thousands of permanent, family-supporting jobs.

So, thanks but no thanks, TC Energy. We are moving on.

Dr. Eric Enberg practices family medicine in West Duluth and is group leader for the Duluth Citizens' Climate Lobby. He also is a member of the Duluth Climate and Environment Network.

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Eric Enberg

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