Did Energy Efficiency Kill the Keystone XL Pipeline?

Nov. 9, 2015
If energy were scarce and oil prices high, would Obama have rejected the Keystone pipeline? Probably not. Energy efficiency may have a lot to do with the pipeline’s demise.

Environmental activists are patting themselves on the back following President Barack Obama’s decision to reject the Keystone XL Pipeline last week.

And they have good reason to do so. The sophisticated campaign strategy employed by 350.org and others will go down in the history books and no doubt be emulated by other environmental and social movements.

Still, one has to ask, would they have succeeded without today’s rebalancing of U.S. energy supply and demand? Or rather, shouldn’t energy efficiency get a pat on the back too?

Consider Obama’s first argument for rejecting the 1,179-mile pipeline, which would have carried crude oil from Alberta to Nebraska. He said that Keystone wouldn’t have done much for the economy.

This would have been a tough argument to make to the U.S. consumer if we were short on energy and prices were high.  Instead, we are in a period of plentiful energy (oil, gas and electricity) and prices are low.

Within two years the U.S. is expected to become a net exporter of oil. This is partly because we’ve become better at producing energy. But we’ve also dampened demand through fuel standards and other energy efficiency endeavors.

New era of energy optimism

From the light bulb to the factory motor to the trucking fleet, we’ve learned how to wring increasing work out of each dollar spent on energy — and we know it. As a result, we not only have ample energy, but ample energy optimism. And for good reason. Data shows efficiency is changing our energy destiny. We’re no longer desperately chasing supply.

The Energy Information Administration forecasts an actual drop in our energy use for transportation over the next 25 years, and it credits energy efficiency.

“Although demand for energy often grew with economic recoveries during the second half of the 20th century, technology and policy factors currently are acting in combination to dampen growth in energy consumption,” EIA said in its Annual Outlook 2015.

Steve Nadel, executive director of the American Council for an Energy Efficient Economy, gave poignant examples in testimony before Congress last spring. Preliminary research by ACCEE showed:

  • An 11 percent drop in home energy use per capita since 1980
  • An 18 percent decline in energy use per square foot by commercial enterprises since a 1999 peak
  • A one-third decrease in industrial energy use by manufacturers relative to 1980 (per dollar value-added)

Perhaps most striking, we saved $800 billion in 2014 alone because of energy efficiency, according to ACEEE.

Basic economics suggests it’s wiser to reduce demand for an energy product than crimp supply. If demand is high, blocking the flow of supply can lead to higher prices, which not only causes economic harm, but also may spur new production for the resource. More oil production is certainly not what Keystone protesters wanted to achieve.

Shift in energy psyche

Our energy hunger is down, and that made the Keystone rejection more palatable for a large swath of the population.

“The old rules said we couldn’t transition to clean energy without squeezing businesses and consumers,” Obama said when he rejected Keystone. “But this is America, and we have come up with new ways and new technologies to break down the old rules, so that today, homegrown American energy is booming, energy prices are falling, and over the past decade, even as our economy has continued to grow, America has cut our total carbon pollution more than any other country on Earth.”

Indeed, technology has helped bolster our energy confidence.  From learning thermostats and energy apps to electric cars, solar, energy storage, microgrids and the like, green tech lets us not only be better consumers, but also managers and producers of energy. Energy is no longer something controlled only from afar by large companies and foreign governments. As a result, the U.S. energy psyche is shifting. We’re abandoning our long held posture as an economic victim of energy.

So canceling an oil pipeline isn’t as scary as it might have been a decade ago. Americans are less and less energy insecure, even sort of energy emboldened. Thank you energy efficiency.

Read more articles like this by subscribing to Energy Efficiency Markets free newsletter.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded RealEnergyWriters.com, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

Twitter: @ElisaWood

LinkedIn: Elisa Wood

Facebook:  Microgrids