New Research from Professor Ryan Kellogg on the Environmental Consequences of Hydrocarbon Infrastructure Policy

For more than a decade, climate advocates and policymakers have argued for a “keep it in the ground” strategy to confront climate change. As such, they’ve often opposed the development of major oil and gas pipelines such as the Dakota Access Pipeline, Mountain Valley Pipeline, Atlantic Coast Pipeline and Keystone XL in the United States. But does blocking a pipeline actually keep fossil fuels in the ground? And if so, at what cost? A new study tackles these questions by studying the Dakota Access Pipeline.

Ryan Kellogg from the University of Chicago Harris School of Public Policy and Thomas Covert from the University of Chicago Energy and Environment Lab studied drilling and production data in North Dakota’s Bakken Shale, and data on rail flows and prices to downstream markets to assess what would have happened if the Dakota Access Pipeline had been blocked. They discovered that 81 percent of the oil that would have been carried by the pipeline would instead have been carried by rail. Bakken oil production would have decreased by only 4 percent. The shift to rail would also have decreased oil producers’ surplus and increased local pollution in towns and cities located near the railroads. The cost of local pollution from rail locomotives would have increased by $588,000 per day, while the cost of local pollution from pipeline transportation would have decreased by $144,000 per day.

“Blocking pipelines does indeed reduce some carbon emissions, but not as much as one might think and the tradeoff to the local environment is substantial as rail cars emit a significant amount of pollution,” says Kellogg, a professor at the Harris School of Public Policy. “This presents an environmental justice dilemma, as the reduction in global climate damages comes with increased local pollution damages for communities near rail lines.”

The study found that in aggregate the cost of blocking the pipeline would have been $45 per tonne of CO₂ abated due to the lost producers’ surplus and increased local pollution damages. This cost per tonne of CO₂ is on par with the contemporaneous U.S. social cost of carbon of $42 per tonne, but significantly lower than the value of $190 per tonne social cost of carbon recently proposed by the U.S. Environmental Protection Agency.

There is a more efficient way to reduce the same amount of CO₂ emissions and reduce, rather than increase, damages from local air pollution, the authors found. A production tax or other policy that regulates fossil fuel production at its source would cost only a few dollars per tonne of CO₂ abated and would reduce local pollution from both pipelines and railroads.

“Blocking pipelines isn’t the most efficient approach to reducing emissions,” says Covert, the scientific director at the Energy and Environment Lab. “Each tonne of CO₂ avoided by blocking a pipeline costs more than simply taxing or regulating oil production at the source. That said, taxing or regulating upstream production can be legally and politically difficult, so blocking a pipeline may still be an attractive option for climate advocates and policymakers.”

This article originally appeared at the Energy Policy Institute at the University of Chicago.