entering the energy and environment policy frontier

7/30/2019 Entering the Energy and Environment Policy Frontier

1/83

STUDY NAME Client Month 2010

Nanos Research Report Project 20XX-XXX

BaselineResearch

ONTARIO MEDICALASSOCIATION

Summary Report Project 2010-101

aseline Research

ent Name

nos Re ort Pro ect 20XX-XXX

Baseline Research

Client Name

Nanos Re ort Pro ect 20XX-XXX

ENTERINGTHEENERGY&ENVIRONMENTPOLICYFRONTIERAnexaminationoftheintersection

ofpublicopinionandpublicpolicy

byNik

Nanos

PublicPolicyScholar

WoodrowWilsonInternationalCenterforScholars

ResearchAssociateProfessor

StateUniversityofNewYork,(Buffalo)


2/83

ENERGY&ENVIRONMENTPOLICYFRONTIER NANOS PAGE | 1

PREFACE

July2013

Thisresearchwasconductedaspartofascholarin

residenceprogramattheWoodrowWilsonInternational

CenterforScholarsinWashington,DC,betweenJanuary

andMay2013.

NikNanosisa2013PublicPolicyScholarattheWilson

Center,aresearch

associate

professor

at

the

State

UniversityofNewYorkatBuffalo,andtheChairmanofthe

NanosResearchGroupofCompanies.

Thefindingsandobservationsarebasedonaseriesof

sources.Theserangedfromelitekeyconsultation

interviewswithavarietyofstakeholdersintheUnited

States,statisticaldatainthepublicdomainonenergy,

mediaclippings,andoriginalpublicopinionresearch

amongAmericans

and

Canadians

on

energy

issues.

TheopinionsexpressedinthisdocumentarethoseofNik

Nanos.


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TABLEOFCONTENTS

PREFACE................................................................................................................................................... 1

TABLEOF

CONTENTS

...........................................................................................................................

2

ABOUTTHISPAPER.............................................................................................................................. 4

WHATWASHEARDTHROUGHTHEPROJECT............................................................................. 5

1.0EXECUTIVESUMMARY.................................................................................................................. 7

2.0CONSIDERATIONSANDOPPORTUNITIESOFTHEPROPOSITIONS............................... 9

2.1DecentralizedPolicyMaking.........................................................................................................................9

2.2Winners,LosersandEnergyChoices............................................................................................................10

2.3ANationalCarbonPolicyDialogue...............................................................................................................11

3.0DECENTRALIZEDPOLICYFRONTIER..................................................................................... 12

4.0PUBLICOPINIONTHEU.S.ANDCANADIANPOLICYENVIRONMENT....................... 14

5.0PUBLICOPINIONENERGYPOLICYDIRECTIONANDPRIORITIES.............................. 17

5.1ReducingGHGEmissionsandOilImports.....................................................................................................17

5.2ViewsonCooperationonEnergyPolicyandEnvironmentalStandards........................................................18

5.3PerceptionsonEnergySources....................................................................................................................21

5.4EnergyPolicies............................................................................................................................................22

5.5EnergyChoices............................................................................................................................................23

6.0PUBLICOPINIONVIEWSONKEYSTONEXLPIPELINE................................................... 24

7.0KEYSTONEXLPIPELINEMEDIAANALYSIS.......................................................................... 26

8.0ELITEOUTREACH......................................................................................................................... 29


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8.1EnergyPolicyCooperation...........................................................................................................................29

8.2PolicyOpportunitiesforU.S.EnergyPolicyMakingwithCanada..................................................................29

8.3PolicyChallengesforU.S.EnergyPolicyMakingwithCanada.......................................................................30

8.4PolicyOpportunitiesforU.S.EnergyPolicyMakingwithMexico..................................................................31

8.5PolicyChallengesforU.S.EnergyPolicyMakingwithMexico.......................................................................31

8.6ImpactofCanadaDiversifyingOilandNaturalGasExportstoAsia...............................................................31

8.7ProjectingEnergyTrendsintotheFuture.....................................................................................................32

8.8OpportunitiesandChallengesforEnergySelfsufficiencyintheUnitedStates..............................................32

9.0OILDEMANDANDTRANSPORTATIONIMPACT................................................................ 34

10.0RENEWABLES,SHALEGASANDDIGGINGINTOTHEPROJECTIONS......................... 36

10.1ProjectionsataGlance..............................................................................................................................37

10.2ObservationsRelatedtoGrowth................................................................................................................38

10.3TheUncertaintyofLongTermProjections.................................................................................................38

10.4MeasurementUncertainty.........................................................................................................................39

11.0PATHFORWARD........................................................................................................................ 42

AppendixA:ProjectMethodology

AppendixB:UnitedStatesandCanadaPublicOpinionSurveysStatisticalTables

AppendixC:UnitedStatesandCanadaPublicOpinionSurveysQuestionnaire

AppendixD:EliteInterviewDiscussionGuide

AppendixE:CalculationsonPetroleumProductsTransportedbyTrain


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ABOUTTHISPAPER

Untilquiterecently,thepossibilityofenergyindependenceintheUnitedStateswasdeemed

remoteandseeminglyunattainable.ThelongstandingbeliefintheUnitedStateswasthatthe

UnitedStateswouldcontinuetorelyonkeyNorthAmericanenergypartners,suchasCanada

andMexico,aswellastheMiddleEast.Evenwiththedependencenarrative,pressuresto

reducegreenhousegasemissionsplacedagrowingfocusondevelopingrenewableenergy

sources,reducingenergydemand,andloweringrelianceonfossilfuelsforenergygeneration.

Theenergyfuturelookeddependentonthefluctuatingandoftenexpensivepriceofcrudeoil

andthe

increasing

louder

calls

for

reduced

greenhouse

gas

(GHG)

emissions.

A

game

changer

in

energypolicywasthediscoveryofnewshalegasinsufficientabundancetoreshapetheenergy

frontier,coupledwithtechnologicaladvancementstoextracttheresource.

ThispaperseekstoexplorethechangingenergylandscapeintheUnitedStatesandCanadaand

toidentifyenergypolicyrisksandopportunities.

Thispaperisbasedonthefollowingsources:

Originalpublicopinionresearchcomprisedofindependentnationalsamplesof

opinionofAmericansandCanadians.

Eliteindepthinterviewswith13experts,advocacygroups,andthemediainthe

UnitedStates.

Ananalysisofsecondarydata,includingmediacoverageintheUnitedStates,

projectionsonsourcesofenergy,andrailtraffic.

AdetailedmethodologyforthisprojectisincludedinAppendixA.

Thegame

changer

in

energy

policy

wasthediscoveryofnewshalegas

insignificantabundancetoreshape

theenergylandscape. Although

coinedbysomeastheharbingerof

anenergyrevolution,therealityis

that,likeallrevolutions,thejourney

mayyieldadestinationdifferent

thanmanysupposed.

fron

tier

thepartofacountrythatbordersanother

country;boundary;border.

thelimitofknowledgeorthemostadvanced

achievementinaparticularfield:thefrontiersofphysics,anouterlimitinafieldofendeavor,

especiallyoneinwhichtheopportunitiesfor

researchanddevelopmenthavenotbeenexploited.


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Energyisfunctionofphysicsand

physicsdoesntrespectmanmade

boundaries. Intelligentenergypolicy

isacontinentalevent.

WHATWASHEARDTHROUGHTHEPROJECT

Bothcountries

are

simultaneously

goingbackwardsCanadawiththe

tarsandsandtheU.S.withfracking.

Theseproblemsaregettinginthe

wayofpolitics,causingcountriesto

back edal.

Wealready

have

astrongly

linked

electricitygridandCanadahas

abundantzerocarbonpowerthat

canbeusedintheU.S..Thetwo

countrieshavearichhistoryof

environmentalcooperation.

Politicsistheprimarychallenge.The

Obamaadministrationneedstosee

beyondtheimmediatechallenges.

Furthermore,Keystoneisarelatively

smallpartofthewholepicture,butit

willpoliticallypoisonbroaderenergy

relations,whetherapprovedornot.

Keystonehasthepotentialto

changethe

U.S./Canada

energy

relationship.Canadiansarentgreat

attellingtheirstoryinregardsto

energy.Theirbiggestproblemis

thattheydontbrag.

There

are

two

visions

for

the

world

relianceonoilandgas,orbecoming

theSaudiArabiaofwindand

sunshine.Wecanmoveineither

direction.

Thechallengeisthethoughtless

resistancetoenergyprojectsofall

kindsthosethatoppose

KeystoneXLnotbecauseofany

environmentalconsequencesbut

becausetheyopposeoiland

kneejerkreactionstoany

proposalsthatproducemore

energysuchaswind.ClosercooperationwithMexico

wouldlead

to

economic

benefits

for

NorthAmerica,makeMexicoaricher

country,andinturnwouldhelpsolve

severalsocialproblems.


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Theprincipalconceptadvancedinthispaperisthat

thegovernmentshouldnotpickenergywinnersand

losersbutfocusonencouragingcompetitionamong

energysourceswithinacommonenvironmental

standard. Alsoofnote,decentralizedsubnational

environmentalpolicymaking,gridlockinCongress,

andpotentialuncertaintyintermsofthescopeof

recoverableenergyresourcesshouldresultingreater

cautioninfavouringoneenergysourceoveranother.

Promotinginvestmentinavarietyoftechnologiesto

recoverandproduceenergyinanenvironmentally

responsiblemannerwilllikelybestminimizethelong

termenergyandenvironmentalpolicyrisks.

Theresearchalsosuggeststhatacomfortable

majorityofAmericanssupportapprovalofthe

KeystoneXLpipeline.

NikNanos


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1.0EXECUTIVESUMMARY

Thispaperproposesthattherearethreeelementstoconsiderindevelopingapathforwardfor

energyandenvironmentalpolicymaking:

CertainstatesandprovincesintheUnitedStatesandCanadaaretakingan

increasinglyproactiveapproachtoenergyandenvironmentpolicy.Thisisfosteringa

decentralizedadoptionoradaptationofenergyorenvironmentalpoliciesas

opposedtonationtonationsummitdecisionmaking. Thisisaresultofthedemand

foractionatthestateorprovinciallevelandthegridlockinCongress.

Thelongtermprojectionsonfutureenergyneedsarevulnerabletoanumberof

uncertaintiesthatrangefromtechnologicalunknowns,whichcouldchangethe

energylandscape,toenvironmentallegislationyettobeenacted. Inthisuncertain

future,governmentsshouldnotfocusonpickingwinnersandlosersbuton

encouraginginvestment

in

energy

technology

so

avariety

of

energy

sources

can

competetosetenvironmentalstandardswithinamarketcontext.

Evenwithdecentralizedstatedrivenpolicymaking,achievingobjectivesforthe

environmentwillbedifficultunlessaframeworkforaNationalCarbonPolicyis

created. ConsideringtheintegrationbetweentheAmericanandCanadian

economies,thenationalgovernmentsneedtotakearoleinstartinganational

dialoguethatlinksacarbonpolicytoenvironmentalgoals.

Principal Findings

IncreasinglydecentralizedpolicymakingAlthoughstatessuchasCaliforniahavetraditionallyledontheenvironmentalpolicyfront, thegridlockinCongress,hasfurtherpropelledstateand

provincialenvironmentalpolicyactivitywithmuchofthedialogueonenvironmentaland

energyissuestakingplaceatthestateandprovinciallevel. Thispolicyenvironmentisone

whichcreatesclustersofsubnationalpoliciesandcoalitionsofstatesandprovinceswith

commonsetsofenvironmentalobjectives.

RelianceonoilfromoutsideofNorthAmericaThepublicopinionsuggeststhatappetitetoreducerelianceonforeignoilfromoutsideofNorthAmericatrumpstheprioritytoreduce

GHG. AlthoughreducingGHGremainsimportantforbothAmericansandCanadians,theneed

forenergysecurity,especiallyamongAmericans,isexceptionallystrong.

AppetiteforpolicycooperationSurveydataindicatethatthereisasignificantopennessamongAmericansandCanadianstocooperateonbothenergyandenvironmentalissues.

Likewise,amajorityoftheindividualswhoparticipatedintheeliteoutreachbelievedthat

greatercooperationonenergyandenvironmentalpolicybetweentheUnitedStatesand

Canadawasnecessary.


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Renewablesandenergywinners/losersEncouragingrenewableenergysourceshasaveryhighlevelofimportanceinthegeneralpopulationbutmajoritieswouldstillsupport

encouragingnaturalgas,oil,andcoaliftheymetgovernmentenvironmentaltargets. This

suggeststhatthepublicismoreoutcome(environment)orientedthanfocusedonpicking

winnersandlosers.

KeystoneXLPipelineThereexistssignificantpublicsupportfortheapprovaloftheKeystoneXLPipelineinboththeUnitedStatesandCanada,butthepositiveimpressionscoresarelower

thansupportforapproval. Thepublicdoesnotnecessarilyembracetheprojectbutbelievesit

shouldbeapproved.

ExaminingthemediacoverageAmediaanalysisof1,046articles,editorials,andletterstothe

editorsinmajormediaoutletsintheUnitedStatesoverthepastfouryearsontheKeystoneXL

Pipelineindicatesthatthecoveragerelatedtoithasbeenmarginallynegativebutbalanced.

TheNewYorkTimeswasnoticeablymorelikelytohaveamediaitemthatleftanegativerather

thanapositiveimpressionoftheKeystoneXLPipeline.

TheUncertaintyofEnergyProjections

A

review

of

data

from

the

U.S.

Geological

Survey,

whichunderpinsmanyofthemodelsthathavelongtermenergyprojections,showsthatthere

aresignificantrangesofestimatesattheassessmentunitlevelfornewervintagesofnaturalgas

discoveries. Addinguncertaintiesrelatedtofutureunknowntechnologicaldevelopmentsin

extractionoryettobeenactedenvironmentallegislationthatmayimpactenergydemandor

thestateoftheeconomyandenergydemand,oneshouldexercisecautionintheverylong

termenergyforecastsandinmakingpolicydecisionstopickwinnersandlosersforenergy

sources.

WillitmovebypipelineorrailRailtrafficdatafromthefirst12weeksof2013indicatethat

whileU.S.railtrafficisuponepercentoverall,railtrafficforpetroleumproductsisup57.3%

overthe

past

year.

An

estimated

additional

1,284

rail

cars

aday

are

needed

to

move

petroleumproductsintheUnitedStatesandCanadacomparedto2011. Assumingthefirst

quartertrendof2013continues,atrainstretchingfromWinnipegtoHoustonwith467,000rail

carswouldberequiredtocarryaoneyearsupplyoftheadditionalpetroleumproducts

transportedbyrail.Itisclearthatthedemandforoilcoupledwiththestateofpipeline

infrastructurehasresultedinanincreasedvolumeofoilbeingtransportedbyrail.

ThesearetheprincipalresearchfindingsofthestudyconductedbyNikNanosaspartofa

scholarinresidenceprogramsupportedbytheWoodrowWilsonInternationalCenterfor

Scholars. Tofollowisthedetailedanalysisandthedatauponwhichthefindingswerebased.


10/83


2.0 CONSIDERATIONSANDOPPORTUNITIESOFTHEPROPOSITIONS

AnexaminationofthepublicopinionintheUnitedStatesandCanada,expertsandkey

stakeholdersintheUnitedStates,anddatainthepublicdomainsuggestsanumberkey

conclusions.

Thethreekeypropositionsareintendedtoaddtothedialogueonthefutureofenergyandits

relationtotheenvironmentinNorthAmerica.

2.1 Decentralized Policy Making

AlthoughthereisanappetiteamongcitizensandexpertsfordevelopingaUnitedStates

CanadaEnergyandEnvironmentalFramework,thisFrameworkwouldbedifficulttoachieve

becauseofthepoliticalcontext.Recently,decentralizedpolicymakinghasbeendrivenby

statesandprovincesratherthanbynationalgovernments. Thisfluidenvironmenthasbeen

exacerbatedbygridlockinCongress. Evenwithobstaclestonationalsolutions,energyandits

environmentalimpact

transcend

borders.

However,

there

exists

apublic

will

to

move

forward.

Considerations Thereexistsalackofpublicunderstandingofthecomplexityofenergyandenergy

issuesandtherolesthatbothCanadaandMexicoplayasenergypartnerswiththe

UnitedStates.

Thereisaperceivedmisalignmentbetweentheenvironmentalprioritiesofthe

ObamaadministrationandthefocusoftheHarpergovernmentonoilsands

development.

Negotiatingabinationalframeworkforenergyandtheenvironmentwillbedifficult.

Moreover,itsratificationbytheU.S.CongressandpotentiallytheCanadian

Parliamentisnotguaranteed. Likewise,entrenchedpoliticalinterests(pro andanti

fossilfuel)viewpolicydecisionsasazerosumgame.

Stateandprovincialjurisdictionsarelikelytolooktoeachotherratherthantotheir

federalgovernmenttoadvanceenergyandenvironmentalpolicy.

The Reality Thesupplyofenergycouldbeasignificanteconomicfactorinenhancingthe

competitivenessofNorthAmericanenterprisesglobally.Concurrently,therewill

likelybecontinuedpublicdemandtoreducegreenhousegasemissions. Energy

markets,includingtheeconomiesinNorthAmerica,alreadytranscendbordersand

aresubnationalintermsofpolicymakingandmarketbehaviour.Therealready


11/83


existsnationalcooperationonahostofothercommoninterests,butmanypolicies

onenergyandtheenvironmentaredrivenatthestateandprovinciallevel.

2.2 Winners, Losers and Energy Choices

Someargue

that

the

country

should

move

to

alow

carbon

economy

in

order

to

help

manage

theimpactofcarbonfuelsontheenvironment,whileothersarguethatweneedtodevelopthe

energyresourceswehavetopromoteprosperity. Ifaneconomicallyandenvironmentally

responsibleeconomyisthegoal,governmentsshouldavoidpickingwinnersandlosersto

minimizerisk.

Environmentaltargetscanbeset,andenergysourcesregardlessofwhethertheyare

renewables,fossil,hydroornuclearshouldcompete. Inthisparadigm,technologyandcompetitionarethekeystomanaginggreenhousegasemissionsandachievingenvironmental

targetswithinacompetitivemarket.

Considerations Technologicalbreakthroughsandlegislativechangeswillsignificantlyimpactthe

energyandenvironmentlandscapeinthefuture.

Itisdifficultformodelsattemptingtoproject20and30yearsintothefuturetotake

intoaccountthetechnologicalbreakthroughsandlegislativechanges. Likewise,

pickingwinnersandlosersbysourceofenergyratherthanbyoutput(beit

environmentaloreconomic)mayalsoberisky.

Shorttermpoliticizedenergypolicydecisionsonspecificprojectsmaypotentiallybe

counterproductivein

terms

of

the

environmental

impact,

such

as

the

infrastructure

tradeoffbetweenmovingoilbypipelineorothermodesoftransportation.

Mediaorganizationsmayengageineditorialcampaignsagainstorinfavourof

specificenergysourcesinsteadoffocusingonthenetenvironmentalimpact. Inthis

case,thesimplificationofthedebatewheresomeenergysourcesareframedas

goodandothersbadshiftsawayfromafocusoneconomicandenvironmental

outcomes.

Consumersareweddedtothestatusquo.Changeoccursreactivelyasaresultof

energyorenvironmentalshocks.

PublicoppositionandNIMBYism(notinmybackyard)toanyenergyproject,

renewableornonrenewable,maybeasignificantfactortoanyprojectregardlessof

thesourceofenergy.


12/83


The Reality Onecanexpect,atsomepoint,adisruptivetechnologytoaltertheenergyand

environmentallandscape.Ifthedestinationofeconomicallyandenvironmentally

sustainableenergysolutionsismoreimportantthanthejourneywherethereisa

tendencyto

pick

energy

winners

and

losers,

the

objective

should

be

to

encourage

investmentintechnologyforadiversityofenergysources,bothnonfossilandfossil,

toworktowardsprovidingeconomicallyfeasibleandenvironmentallyresponsible

energysolutions.Thefocusshouldbeontheendresult,notpickingenergywinners

andlosers.

2.3 A National Carbon Policy Dialogue

ThefactthattherearesignificantpoliticalhurdlestohavingaUnitedStatesCanadaenergyand

environmentalpolicyalignmentshouldnotdetractfrombeginningadialogue.Analternative

firststep

would

be

to

focus

on

creating

aUnited

States

Canada

framework

for

aNational

CarbonPolicyonenergyandtheenvironment. AcommonframeworkwithsharedUnited

StatesCanadaobjectiveswillhelpbothcountriesachieveenvironmentalgoalswhileatthe

sametimecreatinggreatercertaintyinmakinginvestmentsinanarrayofenergysourcesto

meetfutureneeds. TheintegratedeconomiesoftheUnitedStatesandCanadarequireaco

ordinatedapproachtoinvestinenergyrelatedtechnologyandenergygeneration.

Considerations Althoughstatesandprovinceswillcontinuetoproactivelydrivebothenvironmental

andenergypolicies,thereremainsarolefortherespectivefederalgovernmentto

engageand

help

guide

policy

making

towards

aligned

national

objectives.

Thecurrentpoliticalenvironmentisrestrictiveandshouldnotprecludeadialogue

onaNationalCarbonPolicy. Thispotentialdialogueoncarbonrepresentsakey

elementforbothmeetenvironmentalobjectivesandalsopromoteeconomic

prosperity.

The Reality Atsomepoint,aframeworkforaNationalCarbonPolicyintheUnitedStatesand

Canadawillbeputforward. Beginningthatdialoguesooner,ratherthanlater,could

helpcreate

profile

for

the

energy

partnership

that

exists

between

the

United

States

andCanada. ThefirststepistoacknowledgeandpromotethefactintheUnited

StatesthatCanadaisAmericasmostimportantandreliableenergypartnerandto

usethatasasteppingstoneforapoliticalcarbonpolicyandtheenvironment

dialogue.


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3.0DECENTRALIZEDPOLICYFRONTIER

Intermsofenvironmentalpolicy,wemaybe

seeingashifttomoreofadecentralized

policymakingframeworkforthenearfuture.

Thekey

hallmark

of

the

expected

policy

environmentistheadoptionoradaptation

ofpoliciesatthesubnationallevel(state

andprovince). Themostcommonparadigm

ofthepastwasanationtonation

centralizedmodelsuchastheAirQuality

AgreementbetweentheUnitedStatesand

Canada. Applyingadecentralizedframework

toenvironmentalpolicydevelopmentin

NorthAmericaprovidesaglimpseofwhat

could

be

expected

in

the

future

for

this

policyareawhichisbothnationaland

state/provincialinitsgovernance.

Manyofthepasttransnational

environmentalpolicieshavebeenthe

productoftraditionalpolicymakingdecision

processesinwhichleadersandgovernments

meet,negotiate,andratifypolicies. For

example,discussionsonacidrainbetween

theUnitedStatesandCanadawereinitiated

in

1986

by

then

Canadian

Prime

Minister

Brian

Mulroney

through

talks

with

U.S.

President

RonaldReagan.ThesediscussionsculminatedintheAirQualityAgreement,alsoknownasthe

AcidRainTreaty,signedin1991byMulroneyandReaganssuccessor,PresidentGeorgeH.W.

Bush1.Inthisprocess,inadditiontotheappetiteofpoliticalleaderstoadvancetheissue,there

wasapoliticalandlegislativeenvironmenttoenablethosepolicychanges.

Intodayspoliticalenvironment,thelevelofpartisanshipinboththeUnitedStatesandCanada

isquitehigh.ThisisparticularlytrueintheUnitedStates.Grippedinabudgetsequestration

fever,whichnegativelycolorsthepoliticalandlegislativecontext,issuesthatonthesurface

seemtohavebroadpublicsupportaregridlockedinCongress.InCanada,althoughthelevelof

politicalpartisanshipisalsoquitehigh,theparliamentarymajorityoftheHarpergovernment

does

allow

it

to

enable

legislation

it

identifies

as

a

priority.

In

this

situation,

the

traditional

summitmodelofpolicymakingismoreproblematic,becausealthoughthepoliticalwillof

leadersmayberesolute,theabilitytoenableisweakened.

Theprocessofadvancingenvironmentalpolicyonthesummitmodel,suchasthatthatcreated

intheAcidRainTreaty,isdifficultpoliticallyintermsofthedifferentlegislativeprioritiesinthe

UnitedStatesandCanada,therisksrelatedtothenegotiationandratificationprocess,

indeterminateintermsoftime,andcomplexbecauseoftheroleofstate/provincial

Sources:TheEconomist(November24,2012),The

SacramentoBee(April26,2013)


14/83


governmentsinenvironmentalpolicyanddifferentnationallegislativeprioritiesintheUnited

StatesandCanada.

Anexampleofthissubnationaldecentralizationistheincreasinglyimportantrolethatthe

StateofCaliforniahasplayedonenvironmentalissues. Someobservershavedubbedthisthe

Californiaeffect,wherestatepolicyinnovationfallsoutsideofitsjurisdiction2.TheStateof

Californiahas

advanced

policies

on

fuel

standards

which

were

adopted

nationally

and

have

had

abroaderimpactoutsideofCalifornia. InApril2013,aformalagreementbetweentheStateof

CaliforniaandtheProvinceofQuebectolinkcapandtradeprogramswasannouncedwiththe

intentionofexpandingthisagreementtoAustralia,theNortheastoftheUnitedStates,andthe

EuropeanUnion3.Inthisapproach,jurisdictionshaveopensourcelikepolicyadoptionfor

environmentalpolicyincontrastwithmoretraditionalmodelssuchasthoseusedfortheKyoto

Accord,whichincludecomplexinternationalnegotiations.

Throughthecourseoftheeliteconsultations,acommonthreadofopinionrelatedtothelimits

ofthepoliticalsituationtodeliverenergyandenvironmentalpoliciesatthenationallevel

becauseofaseriesoffactorsrangingfrompartisanshipthroughtothevestedinterestsofthe

keyenergy

and

environmental

stakeholders.

Movements

among

some

key

states

and

provinces

tovigorouslyengageinenvironmentalandenergypoliciesislikelyaresponsenotonlytothe

politicallandscape,butalsototheviewthattraditionalnationalandglobalsummitdriven

initiativeshavenotbeeneffective.

Movingforward,decentralizedmovements,asopposedtocentrallydrivensolutions,maytake

onevengreaterimportanceinenvironmentalpolicymaking.


15/83


4.0PublicOpiniontheU.S.andCanadianPolicyEnvironment

Areviewofthepublicopinionenvironmentsuggeststhatcitizensaresupportiveofgreater

U.S.Canadacooperationintermsofbothenergyandenvironmentalpolicies. Likewise,

althoughsomeenergysourceshavemuchmorefavourableimpressionsthanothers,applyinga

commonenvironmental

standard

to

all

energy

sources

and

allowing

them

to

compete

would

likelybeembracedbybothAmericansandCanadiansasdemonstratedinthepublicopinion

research.

Policyisnotcreatedinavacuum.Itislargelytheresultofacombinationoffactors,including

governmentpriorities,publicopinion,andcompetingpolicydemands. Aspartofthisstudy,

U.S.andCanadianpolicymaps,whichvisuallydisplaythepolicylandscapeon15policyissues,

werecreated(Exhibits1and2). BypollingthepublicintheUnitedStatesandCanada,wewere

abletodeterminecitizenspriorities(usingascaleof1to10,where1wasnotatallimportant

and10wasveryimportant)andalsohowconfidentornotconfidenttheywereineachnations

abilitytofindsolutions(forthemap,notconfidentwasassignedavalueof1andconfident

wasassigned

avalue

of

4).

Fifteen

policy

areas

were

rotated

and

tested

as

part

of

the

policy

mappingprocedure,including:

managingthepressuresofanagingpopulation;

furtherprotectingourenvironment;

havingtradepoliciesthatencourageinvestment;

encouragingAmerican/Canadianculture;

beingenergyselfsufficient;

ensuringAmericans/Canadians

have

ahigh

standard

of

living;

investinginoureducationsystem;

keepingourhealthcaresystemstrong;

creatingjobs;

preservingsocialprograms;

balancinggovernmentbudgets;

investingininfrastructure,suchasroadsandbridges;

ensuringsafecommunities;

assertingAmericas/Canadasroleininternationalaffairs;and,

protectingourborders.


16/83


Exhibit1

Exhibit2

Managingagingpopulation

Environment

Tradepoliciesthat

encourageinvestment

EncouragingAmerican

cultureEnergyselfsufficiency

Ensuringhighliving

standards

Investingineducation

Keepinghealthcaresystem

strong

Creatingjobs

Preservingsocialprograms

Balancedbudgets

Infrastructure

Ensuringsafecommunities

America'srolein

int'laffairs

Borderprotection

1.9

2.1

2.3

2.5

2.7

2.9

3.1

6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 10.0

Confidence

(1=notconfident,

4=confid

ent)

Importance(1=notatallimportant,10=veryimportant)

USPolicyConfidencevsImportanceMap(Source:Nanos,n=1,007Americans,April2013)

Managingagingpopulation

Environment

Tradepoliciesthat

encourageinvestment

EncouragingCdnculture

Energyselfsufficiency

Ensuringhighliving

standards

Investingineducation

Keepinghealthcaresystem

strong

Creatingjobs

Preservingsocialprograms

Balancedbudgets

Infrastructure

Ensuringsafecommunities

Canada'srolein

int'laffairs

Borderprotection

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3.0

3.1

6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 10.0

Co

nfidence

(1=notconfident,

4=confide

nt)

Importance(1=notatallimportant,10=veryimportant)

CanadaPolicy ConfidencevsImportanceMap(Source:Nanos,n=1,007Canadians,April2013)


17/83


Thepurposeofthesurveyresearchandthesubsequentcreationofthemapwasto

contextualizeenergyandenvironmentalpolicyprioritieswithinabroaderpolicyframework.

Themapsillustratethreekeypoints:

TheEnvironment

Americansare

much

more

confident

than

Canadians

that

as

a

nation,theycanfindsolutionstofurtherprotecttheenvironment.Ontheother

hand,Americanshavealowlevelofconfidenceinthegovernmentscapabilityto

balancethebudget.AmericansandCanadiansratedenergyselfsufficiencyequally

importanttoinvestingineducationandkeepingthehealthcaresystemstrong.

EnergySelfsufficiencyCanadiansaremuchmoreconfidentthanAmericansin

theircountrysabilitytobeenergyselfsufficient.Second,Canadiansidentified

keepingthehealthcaresystemstrongasthemostimportantpolicyissue.Canadians

are

much

less

confident

than

Americans

on

their

countrys

ability

to

protect

the

environment.

OverallConfidenceAtthetimethesurveywasconducted,Americanswere

generallymoreconfidentthanCanadiansontheircountrysabilitytofindsolutions

topolicychallenges.TheresponsesofAmericansandCanadianscanbevisualizedin

theclustersonthemaps.


18/83


30%

38%

63%

55%

7%

8%

0% 20% 40% 60% 80% 100%

US

Canada

Reducing green house gases

Having North America free from importing oil outside of North America

Unsure

5.0PUBLICOPINIONENERGYPOLICYDIRECTIONANDPRIORITIES

IdentifyingtheprioritiesandconfidenceinfindingsolutionsamongbothAmericansand

CanadiansenabledustounderstandthecontextintheUnitedStatesandCanadaforenergy

andtheenvironmentpolicymaking. Itwouldbefairtosaythatwhenonetestsonpriorities

individually,most

are

deemed

important

by

the

public.

Examining

views

in

terms

of

aforced

choicemodel4oftwoprioritiesprovidesabetterunderstandingofthetradeoffsbetween

reducingGHGandreducingrelianceonoilfromoutsideofNorthAmerica.Broadlyspeaking,

ourexplorationofpolicyprioritiesfocusedonperceptionsrelatedtoenergyandtothe

environment.Althoughthetermenergysecurityhasbeenusedinotherstudies,wedidnot

usethatterminthequestionnairebecausewecouldnotguaranteethatrespondentswould

interpretthemeaningofenergysecurityconsistently.Ratherthanusethetermenergy

security,wepresentedrespondentswithspecificpolicyoptionsandtestedAmericansand

Canadiansviewsonthesedetailedpolicyoptions.

5.1 Reducing GHG Emissions and Oil Imports

PublicopinionresearchshowsthatbothAmericansandCanadiansfavorreducingrelianceon

importingoilfromoutsideofNorthAmericaoverreducingGHGemissions. Americanswere

twiceaslikelytopreferlessrelianceonoilimportsasapriority(63percent)thanreducingGHG

(30percent). Theseviewsaregenerallyconsistentacrossmostdemographicsubpopulations.

ConsideringCanadasvastenergyresources,itisnotsurprisingthatfewerCanadiansidentified

relianceonoilfromoutsideofNorthAmericaasaconcern. TheonlyregioninNorthAmerica

Exhibit3

Question:Whatismoreimportanttoyou,reducinggreenhousegasesorhavingNorthAmericafreefromimportingoiloutsideofNorth

America?


19/83


thatdeviatedfromthistrendwasQuebec. AmongthesubsampleofQuebecers,53percent

identifiedreducingGHGemissionsasapriority,comparedto39percentthatidentified

reducingrelianceonimportedoilasapriority. ThisstudysfindingsonQuebecareconsistent

withotherpublicopinionresearchonenvironmentalissuesconductedinthatprovince,which

suggestagreaterfocusontheenvironmentasanissueinQuebeccomparedtomanyother

regions.This

is

likely

aresult

of

Quebecs

reliance

on

renewable

hydro

electric

energy.

For

example,accordingtotheGovernmentofQuebec,97percentofalltheelectricitytheprovince

producesisgreenelectricity5.

5.2 Views on Co-operation on Energy Policy and Environmental

Standards

Consistentwiththefindingsoftheeliteoutreach,respondentsindicatedtheirdesireforgreater

cooperationwithinNorthAmericaintheareasofenergyandtheenvironment. Thedesirefor

energycooperationishigherintheUnitedStatesthaninCanada,andinfact,manyAmericans

wanttoseetheUnitedStatesworkmorecloselywithCanadaonallenergyrelatedissues(86

percent).In

contrast,

just

under

seven

out

of

ten

Canadians

(69

percent)

would

like

to

see

closercooperationwiththeUnitedStatesonenergyrelatedissues. Still,inbothcountries,

respondentsindicatedtheirdesirefortheUnitedStatesandCanadatobecloseenergy

partners.

AlthoughtheappetiteforenergycooperationwithMexicoissignificantinboththeUnited

StatesandCanada,thelevelislowerthanfortheUnitedStatesCanadapartnership(86percent

ofU.S.respondentsindicatedadesireforCloserCooperationwithCanada,butonly60percent

Exhibit4Thinkingofthefuturedirectionofenergypolicy,woulditbeyourpreferencefortheretobeclosercooperationorless

cooperationwithAmerica/Canadaasanenergypartner


20/83


ofU.S.respondentsindicatedtheirdesireforCloserCooperationwithMexico;CanadaCloser

CooperationwiththeUnitedStates69percent,CloserCooperationwithMexico47percent).

Anumberoftheindividualsintheeliteinterviewsbelievedthatgreatercooperationbetween

theUnitedStatesandCanadaonenergyissueswouldbeachievablebutthatthereare

structuralobstaclestoaddingMexicoasanenergypartnerintheshortterm.Theobstacles

theyidentified

include

the

need

for

the

Mexican

energy

sector

to

reform

and

for

the

Mexican

governmenttosetapossiblenewpathforMexicosstateownedpetroleumcompany,PEMEX.

BothAmericansandCanadiansalsothoughthavingcommonenvironmentalstandardsbetween

countrieswasquiteimportant.Inasimilarpatterntotheenergycooperationresults,thelevel

ofintensityofimportanceofcooperationbetweentheUnitedStatesandCanadawashigherin

theUSandalsohigherthantheintensityofimportanceofcooperationbetweentheUnited

States,Canada,andMexico.

60%

47%

31%

27%

9%

26%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

US

Canada

Closer cooperation Less cooperation Unsure

Exhibit5

Thinkingofthefuturedirectionofenergypolicy,woulditbeyourpreferencefortheretobeclosercooperationorless

cooperationwithMexicoasanenergypartner


21/83


FactoringrespondentsinboththeUnitedStatesandCanadawhobelieveditwaseither

importantorsomewhatimportant,verystrongproportionsofthepopulaceseecooperationas

animportantelementoftheenvironmentalpolicymix.

Thesurveyopinionwasconsistentwiththeelitefeedback.Issuessuchasproximityofthethree

markets,currenttradealignmentthroughtheNAFTA,andpositivepotentialspillovereffectsofstrengthenedtiesamongthethreecountriespointtoanopportunitytoexploreamoreco

ordinatedenergyandenvironmentalframeworkforNorthAmerica.Manyoftheexpertsnoted

thateachcountryisnotamonolithicenergymarketbutaseriesofenergymarketswith

differentneedsthusnecessitatingcrossnationalandsubregionalstrategiestooptimize

energy.Likewise,environmentalconcerns,suchasacidrain,wereseenascommonissues

requiringabi ormultinationalresponse.

Duringtheeliteconsultations,anumberofindividualsindicatedthatbettercountrytocountry

policydevelopmentonbothenergyandenvironmentalissueswouldhaveapositiveimpacton

environmentalpolicyoutcomesandwouldbenefittheNorthAmericaneconomy.

Basedonpublicopinionandtheeliteoutreach,itisnotinconceivablethatCanadaandthe

UnitedStatesmightconsiderdevelopingacommonframeworktotackleenergyand

environmentalpriorities. Onceestablished,thesebilateralpoliciescouldbeextendedto

includeMexico,afterthereisgreatercertaintyonthefutureconfigurationofPEMEX. This

transition/developmentwouldbeakintofreetradediscussionswheretheCanadaU.S.Free

TradeAgreementwasestablishedfirstandthenevolvedintotheNorthAmericanFreeTrade

Agreement,whichincludedMexico.

Exhibit6

Arethefollowingimportant,somewhatimportant,somewhat

unimportantorunimportanttoyou:

38%

57%

42%

64%

37%

24%

36%

22%

12%

5%

12%

3%

9%

11%

7%

9%

4%

4%

3%

3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Having common environmental standards betweenCanada, Mexico, and the US (Can)

Having common environmental standards betweenCanada, Mexico, and the US (US)

Having common environmental standards between

Canada and the US (Can)

Having common environmental standards betweenCanada and the US (US)

Important Somewhat important Somewhat unimportant Unimportant Unsure


22/83


5.3 Perceptions on Energy Sources

Althoughthepurposeofthestudywasnottoexamineindetailtheenergymixofthefuture,

oneofitsobjectiveswastogetasenseofhowthepublicfeltaboutanarrayofenergysources.

Thestudyidentifiedrenewablesasacentralpartofthepublicenergynarrative,aswellasthe

publicsperception

of

the

relationship

between

coal

and

natural

gas.

Combining

the

views

of

AmericansandCanadianswhosaidencouragingrenewableswasimportantorsomewhat

importantsuggestedthattheappetiteforencouragingrenewablesisquitestrong.Thiswas

especiallytrueintheUnitedStates,moresothaninCanada(83percentofAmericanssaid

encouragingrenewableswasimportantorsomewhatimportant,comparedto75percentof

Canadians).Similarly,viewsonencouragingnaturalgasratherthancoalreceivedpositivebut

notasintenseimportancescores.Ofnote,amajorityofCanadiansandAmericansstillthought

thatencouragingcoalandnuclearwasimportantorsomewhatimportant.

IntheUnitedStatesthereisaclearandsignificantpublicappetitetoencouragerenewable

energy,suchaswind,solar,andhydropower.Thepublicwouldsupportstrategiesthatfavor

renewableenergy

as

part

of

abroader

long

term

energy

plan.

24%

36%

50%

58%

51%

70%

31%

26%

31%

25%

24%

13%

15%

9%

9%

4%

10%

4%

21%

22%

6%

7%

13%

12%

10%

8%

5%

6%

3%

2%

0% 20% 40% 60% 80% 100%

Encouraging the use of nuclear energy (Can)

Encouraging the use of nuclear energy (US)

Using more natural gas rather than coal (Can)

Using more natural gas rather than coal (US)

Encouraging the use of more renewable energy, such as wind, solar and hydropower (Can)

Encouraging the use of more renewable energy, such as wind, solar and hydropower (US)


Exhibit7

Arethefollowingimportant,somewhatimportant,somewhatunimportantor

unimportanttoyou[ROTATE]:


23/83


5.4 Energy Policies

Inadditiontoensuringastablesupplyofenergyandeliminatingtherelianceofoilfromoutside

ofNorthAmerica,Americansidentifiedhavinglowerenergypricesasimportant. Newtaxeson

fossilfuelshadthelowestlevelofimportanceonthepolicygrid,althoughAmericanswere

morelikely

to

believe

it

was

important

compared

to

Canadians

(United

States

Important/somewhatimportant:48percent;CanadaImportant/somewhatimportant:38

percent). MostotherproposalsincludingreducingGHG,reducingtheuseoffossilfuels,and

introducingtougheremissionscontrolsforvehicleswereidentifiedasimportantorsomewhat

importantpoliciesforaclearmajorityofthepopulationsinboththeUnitedStatesandCanada.

Beyondensuringastablesupplyofenergy,reducingrelianceonoilfromoutsideofNorth

America,andhavinglowenergyprices,itisclearthatnewtaxesonfossilfuelswouldbemet

withresistancebysome.Significantly,Americanswouldmorelikelyacceptnewtaxescompared

toCanadians.

15%

27%

32%

49%

40%

55%

37%

55%

47%

56%

50%

70%

62%

73%

60%

88%

23%

21%

37%

21%

36%

24%

36%

24%

27%

22%

27%

18%

28%

16%

27%

10%

21%

9%

17%

6%

12%

5%

16%

6%

9%

5%

14%

5%

6%

2%

6%

0%

36%

38%

11%

20%

10%

13%

9%

12%

14%

11%

7%

4%

2%

6%

3%

1%

5%

5%

3%

4%

2%

3%

2%

3%

4%

5%

2%

2%

3%

3%

4%

1%

0% 20% 40% 60% 80% 100%

Having new taxes on fossil fuels such as gasoline, heating oil and natural gas toreduce their use and green house gases (Can)

Having new taxes on fossil fuels such as gasoline, heating oil and natural gas toreduce their use and green house gases (US)

Introducing tougher emission controls for vehicles (Can)

Introducing tougher emission controls for vehicles (US)

Getting businesses to reduce their use of fossil fuels such as gasoline, coal, oiland natural gas (Can)

Getting businesses to reduce their use of fossil fuels such as gasoline, coal, oiland natural gas (US)

Getting the people to reduce their use of fossil fuels such as gasoline, coal, oiland natural gas (Can)

Getting the people to reduce their use of fossil fuels such as gasoline, coal, oiland natural gas (US)

Reducing green house gases (Can)

Reducing green house gases (US)

Having the lowest energy prices possible (Can)

Having the lowest energy prices possible (US)

Trying to eliminate reliance on oil from outside of North America (Can)

Trying to eliminate reliance on oil from outside of North America (US)

Ensuring a stable supply of energy (Can)

Ensuring a stable supply of energy (US)


Exhibit8

Arethefollowingimportant,somewhatimportant,somewhatunimportantor

unimportanttoyou[ROTATE]:


24/83


5.5 Energy Choices

Inordertoexploretheconceptofchoicesbetweenfossilbasedenergysources,aseriesof

possiblescenarioswastestedamongrespondentsintheUnitedStatesandCanada.The

purposeofthisapproachwastomeasureopennessorresistancetodifferentfossilfueloptions

basedon

apossible

association

with

the

fossil

fuel

meeting

government

targets

for

GHG

emissions(nospecifictargetsweretestedbecauseofthecomplexityoftheissue).Amajorityof

Americanssupportedthecontinueduseofallfossilfuelsifsuchfuelsmetgovernmenttargets

forreducingGHGemissions.Naturalgashadthehighestlevelofsupport,andalthoughcoalhad

thelowestcomparativelevel,63percentofAmericanssaidtheywouldsupportorsomewhat

supporttheuseofcoalintheUnitedStatesifitmetgovernmenttargetsforGHGemissions.

ThemajorityofCanadianrespondentswerealsosupportiveofnaturalgasifitmetgovernment

targetsforGHG,butthepercentageofCanadianswhoencouragedtheusecoalwas50percent

infavourand40percentagainst,with10percentunsure.

Basedonthepublicopinion,onecansurmisethatamajorityofthepublicislikelymorefocused

onthe

ability

of

an

energy

source

to

meet

aparticular

environmental

standard

rather

than

pickingwinnersandloserswherespecificsourcesofenergyareactivelydiscouraged.

22%

42%

33%

44%

50%

61%

28%

21%

34%

25%

33%

23%

19%

10%

13%

7%

6%

3%

21%

20%

9%

14%

4%

6%

11%

8%

12%

10%

8%

7%

0% 10% 20% 30% 40% 50% 60%70% 80%90%100%

If coal met government targets for green housegas emissions, encouraging the use of coal(Can)

If coal met government targets for green housegas emissions, encouraging the use of coal (US)

If oil met government targets for green house gasemissions, encouraging the use of oil (Can)

If oil met government targets for green house gasemissions, encouraging the use of oil (US)

If natural gas met government targets for greenhouse gas emissions, encouraging the use of

natural gas (Can)

If natural gas met government targets for greenhouse gas emissions, encouraging the use of

natural gas (US)

Support Somewhat support Somewhat oppose Oppose Unsure

Exhibit9

Wouldyousupport,somewhatsupport,somewhatoppose

oropposethefollowing:


25/83


6.0PUBLICOPINIONVIEWSONKEYSTONEXLPIPELINE

ExaminingtheviewsofAmericansandCanadiansontheKeystoneXLPipelinesuggeststhatthe

pipelineitselfhasasignificantlevelofawarenessinbothcountries.Theawarenessofthe

pipelineinCanadaislikelyaresultoftheeffortsofbothenvironmentalistsandvarious

Canadiangovernments,

including

provincial

and

federally

elected

officials,

to

create

avisible

profileontheprojectinCanadaandintheUnitedStates.AstheObamaadministration

deliberateswhethertoapprovethepipeline,Canadianofficialsareespeciallykeentoadvance

publicopinionintheUnitedStatesinfavoroftheKeystoneXLPipeline.

75%

92%

25%

6%

1%

3%

0% 20% 40% 60% 80% 100%

US

Canada

Heard Not heard Unsure

44%

32%

26%

28%

10%

19%

14%

15%

6%

6%

0% 20% 40% 60% 80% 100%

US

Canada

Positive Somewhat positive Somewhat negative Negative Unsure

Exhibit 10Question: Have you heard or not heard of the Keystone Pipeline project which is a pipeline system totransport synthetic crude oil and bitumen from the Alberta oil sands in Canada to the United States?

Exhibit 11Question: Do you have a positive, somewhat positive, somewhat negative or negative view of theKeystone Pipeline project? (Aware only)


26/83


ItisalsoclearthatthepipelinesvisibilityintheUnitedStatesislargelyduetosignificantmedia

coverage,includingthepipelinesprominenceduringthemostrecentpresidentialelection

cyclewhenadecisionwaspostponed.

AnexaminationoftheotheropinionsexploredaspartofthestudyindicatesthatAmericans

weretwiceaslikelytoplacereducingdependenceonoilfromoutsideofNorthAmericaasa

moreimportant

policy

priority

(63

percent)

than

reducing

GHG

emissions

(30

percent)

in

a

directtradeoff(i.e.choosedirectlybetweenthetwopossiblepriorities)situation.However,

whentestedindependently,reducingGHGwasconsideredimportantorsomewhatimportant

byalmosteightinten(78percent)Americans,whiletryingtoeliminaterelianceonoilfrom

outsideofNorthAmericawasconsideredimportantorsomewhatimportantbynineinten

Americans(90percent).AlthoughreducingGHGisimportanttoAmericans,whenfacedwitha

choicebetweenreducingGHGemissionsorlesseningdependenceonoilfromoutsideofNorth

America,Americanswouldprefertoreducedependenceonexternalsourcesofoil.

ImpressionsmeasuredinthepublicopinioninbothCanadaandtheUnitedStateswereless

positivethansupportforthepipeline.ThisresultsuggeststhatAmericansandCanadiansmay

notbe

embracing

the

project

proactively,

but

generally

see

it

as

necessary

in

terms

of

energy

securitypriorities.

52%

45%

22%

23%

7%

15%

14%

13%

5%

5%

0% 20% 40% 60% 80% 100%

US

Canada

Support Somewhat support Somewhat oppose Oppose Unsure

Exhibit 12Question: Based on what you have heard about the proposed Keystone XL Pipeline between Canada and theUS, do you support, somewhat support, somewhat oppose or oppose the US government approving the

project? (Aware only)


27/83


7.0KEYSTONEXLPIPELINEMEDIAANALYSIS

Themediaanalysisandpublicopinionresearchbothsuggestthatthereexistsconsiderable

awarenessoftheKeystoneXLpipelineintheUnitedStates.Thenewspapercoveragewasonly

marginallynegative,withtheexceptionofonemajormediaorganizationthatwasconsistently

negative.

Thekey

conclusion

is

that

the

media

coverage

of

the

pipeline

has

not

been

overwhelminglynegative.

Aspartofthestudy,weanalyzed1,046itemsinthetopnewspapersbycirculationinthe

UnitedStates.ThesearchparametersforthemediaanalysisincludedthekeywordsKeystone

andpipelinefortheperiodofthefirstObamaadministrationthroughApril1,2013.Eachof

theitemswasreadandcategorizedintermsofrelevance(onascaleof1to5,where1waslow

relevanceand5washighrelevance)andalsointermsofimpressionoftheKeystoneXLPipeline

(onascaleof1to5,where1wasnegativeimpressionand5waspositiveimpression).

Overthecourseofthelastfouryears,therehavebeen483millionmediaimpressions(reachin

themarketplacebasedonthecirculationofnewspaperorganisations)and1,046items(articles,

editorials,opinionpieces,letterstotheeditors,etc.)relatedtotheKeystoneXLPipelineprojectintheUnitedStatesamongmajorAmericannewspapers.Thisestimateexcludestelevisionand

radiocoverageofthepipeline. Overall,amajorityoftheitemsexaminedwereprimarily

focusedontheKeystoneXLPipeline,withahighdegreeofrelevancetotheissue.Theabsolute

numberofitemsintheanalysisshowthatthemediaimpressionsweremarginallymorelikelyto

projectanegativeorsomewhatnegativeimpression(31.0percentwererateda1and2onthe

5pointscale)ratherthanapositiveimpression(25.6percentwasa4or5onthe5pointscale).

Exhibit13

RelevanceofNewspaperItemsreferringtoKeystoneXLPipeline

Frequency PercentCumulative

Percent

Value Low relevance 148 14.1 14.1

2 103 9.8 24.0

3 104 9.9 33.9

4 96 9.2 43.1

High relevance 595 56.9 100.0

Total 1046 100.0


28/83


Exhibit14

Positive/NegativeImpressionsofKeystoneXLPipelineamongNewspaperItems

Frequency PercentCumulative

Percent

Value Negative impression 122 11.7 11.7

2 202 19.3 31.0

3 455 43.5 74.5

4 125 12.0 86.4

Positive impression 142 13.6 100.0

Total 1046 100.0

Exhibit15

Positive/NegativeImpressionsofKeystoneXLPipelineamongNewspaperItems

KeystoneXLMediaImpressions Impressions Percent

PositiveMediaImpressions 95,869,541 19.8%

NeutralMediaImpressions 224,533,005 46.4%

NegativeMediaImpressions (163,080,745) 33.7%

TotalMediaImpressions 483,483,291 100.0%

NetImpactofMediaImpressions (67,211,204)

Onceonefactorsthemediaimpressionsoftherespectivenewspaperorganizations(Exhibit15),

however,theimpactbecomesmorenoticeablynegative.Overall,therewerealmost483million

mediaimpressionsintheUnitedStatesonKeystoneXLPipelineduringtheanalysisperiod,with

34percentofthenewspaperimpressionsbeingnegativeand20percentofthereachpositive.

Readersshouldalsonotethatoneimportantnewspaperorganizationhadadisproportionate

impactontheKeystoneXLPipelinenarrativeinthenewspaperimpressionanalysis.Thenet

impactofitemsfromtheNewYorkTimesresultedin53millionnetnegativemedia

impressions.Thissingleorganizationrepresented79percentofthenetnegativeimpressionsin

theUnitedStatesnewspapermarketplaceonanaggregatedbasis.Likewise,fortheperiodin

theanalysis,theNewYorkTimeswasestimatedtohaveapproximately threetimesgreater

likelihoodto

have

anegative

rather

than

apositive

article

on

the

Keystone

XL

Pipeline

(see

Exhibit15:38percentnegativeimpressioncomparedto13percentpositiveimpression).This

suggeststhat,excludingtheNewYorkTimes,coverageoftheKeystoneXLPipelinehas

generallybeenbalancedbetweenpositiveandnegativestories(onlyanetnegativefivepercent

differentialasopposedtoanegative14pointdifferentialbetweenpositiveandnegative

impressions).


29/83


Exhibit16

NewYorkTimesMediaImpressionsofKeystoneXLPipelineNewspaperItems

withaComparisonoftheAggregatedImpressionswithouttheNewYorkTimesItems

KeystoneXLMediaImpressions ImpressionsNYT Percent Netw/oNYT Percent

PositiveMedia

Impressions

25,821,840

12.5%

70,047,701

25.3%

NeutralMediaImpressions 101,673,495 49.2% 122,859,510 44.4%

NegativeMediaImpressions (79,079,385) 38.3% 84,001,360 30.3%

TotalMediaImpressions 206,574,720 100.0% 276,908,571

NetImpactofMediaImpressions (53,257,545.00) (13,953,659)


30/83


8.0ELITEOUTREACHAspartoftheresearchstudy,aseriesofeliteinterviews,whichaddressedenergyissuesthat

relatedtoCanadaandMexico,wereconductedwithindividualsintheenergyandenvironment

sectorsintheUnitedStates.Theeliteoutreachincludedadvocacygroups,associations,experts,

andthe

media.

The

elite

interviews

were

conducted

either

in

person

or

by

phone.

The

purpose

oftheinterviewswastoprovidecontextfortheenergypolicyresearchandtohelpgather

informationsourcesforthestudyarea.Theanalysisofthe13indepthelitestakeholder

outreachinterviewsshouldbeconsideredqualitativeinnatureandcannotbeprojectedtoany

group(seeAppendixDfortheEliteOutreachDiscussionGuide).

Theindividualsthatsharedtheirviewsaspartoftheeliteoutreachgenerallyreinforcedthe

needforgreatercooperationbetweentheUnitedStatesandCanadaonbothenergyand

environmentalpolicies. Therewassignificantconcernrelatedtotheabilitytodevelopbi

nationalsolutionsbecauseofthecurrentpoliticalenvironmentintheUnitedStates.

8.1 Energy Policy Cooperation

WhenaskedaboutthefuturedirectionofenergypolicyintheUnitedStates,themajorityof

individualsconsultedexpressedtheviewthattheUnitedStatesshouldhavecloserco

operationwithbothCanadaandMexicoonenergyissues.Theindividualsbelievedthatthe

benefitsofgreatercooperationoutweighedtherisks,andapotentialhemisphericenergy

securityandenvironmentalframeworkorstrategy.Theyalsobelievedthatmultilateral

cooperationcouldbenefittheUS,Canada,andMexico. Alreadyeconomicpartnersthroughthe

NAFTA,thethreecountriescouldworktogetheronenergyandenvironmentissues.Individuals

fromtheeliteconsultationsidentifiedtwofactorspositiverelationswithbothMexicoand

Canada,andthecloseproximityofenergyresourcestoUSmarketsasopportunitiestoengage

incontinental

environmental

priorities.

8.2 Policy Opportunities for U.S. Energy Policy Making with Canada

TheelitestakeholdershaddiverseandsometimesconflictingviewsofU.S.energypolicywith

respecttoCanada,thoughtherewereanumberofsignificantcommonalitiesofopinion.

Whetheronewasanenvironmentaladvocate,industryassociationrepresentative,or

environmentorexpert,thekeyconsensusisthattheUnitedStatesandCanadahavetowork

morecloselyonenergyandenvironmentalpolicy. Theelitestakeholdersgenerallybelieved

thatthecurrentpolicycontextdidnotyieldoptimalenergyorenvironmentalpolicyoutcomes.

Thecommonthreadsofeliteopinionincluded:

1. CooperationTheUnitedStatesandCanadaneedtoembracepoliciesthat

promotegreaterNorthAmericancooperationonenergyandenvironmentalissues

inordertopromoteinvestmentinenergyinfrastructureandtoachieve

environmentalobjectives.


31/83


2. SmartGridAnumberofexpertspointedtotheneedtofurtherpromoteaNorth

Americanelectricitysmartgridtoallowthemovementofelectricityacrossthe

borderswhilerealizingthatNorthAmericaisaseriesofregionalenergymarkets

withdifferentneeds,energycapabilities,andpriorities.

3. CooperationonEnvironmentalObjectivesTheUnitedStatesandCanadahavea

richhistoryofenvironmentalcooperationinmanyareas,suchasacidrain,andthe

twocountriesoughttoextendthiscooperationtoenergyandenvironmentpolicy

frameworks.

8.3 Policy Challenges for U.S. Energy Policy Making with Canada

ElitestakeholdersidentifiedanumberofchallengesfacingtheUnitedStatesandCanadaonco

ordinatingenergypolicy.Manyofthesechallengesstemfromthelackofacoordinatedpolicy

frameworkbetweenthetwocountriesonenergyandtheenvironment.Otherchallengesare

rootedinthedomesticpoliticalsituationineachcountry.Thesechallengesincluded:

1. Theperceivedmisalignmentofnationalobjectivesinenergyandtheenvironment

betweentheObamaadministrationandtheHarpergovernment.

2. Thebeliefthatproactivestateandprovincialgovernmentsareshapingenergyand

environmentalpolicyduetoweakfederalpoliticalleadershipintheUnitedStates

andCanadaresultinginpolicyadhockery.

3. PublicfailuretothinkofCanadaasAmericasmostimportantenergypartner.

4. Lackof

knowledge

in

the

United

States

of

Canadas

environmental

record.

5. Ingeneral,theconcernthattheAmericanpublicseesCanadaashavingavested

interestinfossilfuelswithoilsandsdevelopmentasthesignatureCanadianenergy

initiativeinthepublicdomain.Likewise,theAmericanpublicisgenerallyunawareof

Canadasdiversifiedportfolioofenergysources,includingCanadassignificant

renewablehydroelectriccapacity.

Therewasdisagreementamongtheelitestakeholdersonahandfulofissues.Anumberofthe

participantsintheeliteconsultationidentifiedtheneedtoreduceNorthAmericascarbon

footprint.Other

respondents

believe

that

the

Keystone

XL

Pipeline

either

condemned

the

UnitedStatestocontinuedrelianceoncarbonfuels,orwasnecessaryaspartofAmericaslong

termenergyfuture.


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8.4 Policy Opportunities for U.S. Energy Policy Making with Mexico

WhilemanyindividualsintheeliteoutreachviewedjointUnitedStatesCanadaenergypolicyas

opportunitiesforpolicyalignment,thesesamerespondentsviewedjointUnitedStatesMexico

policyintermsofinvestmentopportunities.

1. Manyelite

respondents

expect

Mexicos

energy

sector

to

be

reformed

and

predict

thatthesereformswillpavethewayforinvestmentandtechnologytransfer

opportunitiesfortheUnitedStates,whichwillpromoteMexicaneconomicgrowth.

2. TheUnitedStateshasaninterestinthesuccessfulreformofMexicosenergysector

becauseastrongerMexicoleadstogreaterstabilityintheUnitedStatesMexico

relationship.

3. ThereisarangeofenergyopportunitiesfortheUnitedStatestoexplorewith

Mexico.TheseopportunitiesincludesupportingMexicosenergyconservationand

efficiency,and

developing

solar,

shale

gas,

and

refining

capacities

in

Mexico.

8.5 Policy Challenges for U.S. Energy Policy Making with Mexico

PolicychallengesrelatedtoU.S.energypolicyvisvisMexicoweregenerallyaddressedin

termsofstructuralobstacles,domesticpoliticalissues,andMexicanU.S.politicallegacyissues

accordingtotheindividualsthatparticipatedintheeliteoutreach.

1. ThestructureoftheMexicanenergyindustry,includingconstitutionallimitations

andresistancetochange,wereoftencitedbytheelitestakeholdersaschallengesto

energypolicymaking.

2. StakeholdersalsonotedthecomplexityoftheU.S.Mexicanrelationshipintermsof

immigration,bordersecurityissues,andU.S.foreigninvestmentasbeingkey

challengestobemanaged.

3. TheU.S.publicneedstobetterunderstandtheroleofMexicoasaU.S.energy

partner.

4. ThereneedstobegreateralignmentoftheenvironmentalpoliciesbetweenMexico

andtheUnitedStates.

8.6 Impact of Canada Diversifying Oil and Natural Gas Exports to Asia

AmajorityofelitestakeholdersbelievedthatCanadiandiversificationofexportsinoiland

naturalgastoAsiawouldhaveanimpactonU.S.energypolicy.Opinionamongtheexperts,

advocacygroups,andmediaincludedintheoutreachwasmixedastowhethertheimpact

wouldbepositiveornegative.


33/83


WhenaskedthesamequestionontheimpactofCanadianenergydiversificationonU.S.

environmentalpolicy,however,elitestakeholdersweretwiceaslikelytosaythatCanadian

energydiversificationtoAsianmarketswouldnothaveanimpactonU.S.environmentalpolicy.

ElitestakeholdersgenerallybelievedthattheUnitedStatesisonaparticularenvironmental

policypath,irrespectiveofCanadianenergymarketpriorities,butthatchangesinCanadian

energypolicy

priorities

would

more

likely

have

adirect

impact

on

U.S.

energy

policy

decisions.

8.7 Projecting Energy Trends into the Future

ElitestakeholdersweregenerallydividedintermsofconfidenceintheInternationalEnergy

Agencys(IEA)projectionsthattheUnitedStatescouldbeanetoilexporterby2030andanet

exporterofnaturalgasby20206.ThelackofconsensusovertheIEAprojectionsrangedfrom

viewsthattheIEAhasagoodtrackrecord,toviewsthattheIEAiseithertoooptimisticortoo

pessimistic.

WhenaskedaboutthelongtermmixofenergysourcesintheUnitedStates,mostelite

stakeholders

consulted

believed

that

fossil

fuels

would

continue

to

dominate

the

mix

but

would

diminishintotalenergysourceshare.Manycouchedtheirviewsintermsofincremental

changes,forexample,morerenewableenergyandlesscoalenergy.Theexceptionwasnatural

gas,whichwasrecognizedbyanumberofindividualsastheenergysourcewiththegreatest

positiveornegativechanges.

8.8 Opportunities and Challenges for Energy Self-sufficiency in the

United States

ElitestakeholderswereoptimisticaboutthefutureofenergyintheUnitedStates. Forthose

moreinclinedtorenewableenergysuchaswindorsolar,therewasasenseofoptimismthatin

thelong

run,

renewable

energy

sources

could

be

aviable

and

important

part

of

the

energy

mix.

Otherelitestakeholdersbelievedthattechnologywouldenablegreaterdevelopmentofshale

gasanddomesticoil. Regardless,mostelitestakeholdersacknowledgedthatshalegasand

shaleoilwouldhaveanimportantimpactontheconventionalenergypicture.Asoneelite

stakeholdersaid,Therearetwovisionsoftheworldrelianceonoilandgas,orbecomingthe

SaudiArabiaofwindandsunshine.Wecanmoveineitherdirection.Anumberofthose

consultedexpectedmovementforwardonboththerenewableandcarbonfronts.

Manyofthechallengestoachievingenergyselfsufficiencycitedbyelitestakeholderswere

politicalinnature:

1. Energyisnotwellunderstoodbythepublic.Thereisstrongrhetoriconallsidesof

theissue.

2. Theinfluenceofthefossilfuellobbyonthepoliticalsystemwasseenasanobstacle

tochange.


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3. Oneindividualsaid,thethoughtlessresistancetoenergyprojectsofallkinds,

fossilfuelorrenewablepropelledbythenotinmybackyardsyndrome,isa

significantproblem.


35/83


9.0OILDEMANDANDTRANSPORTATIONIMPACT

Anotherindicatoroftheshortterminfrastructureneedsoftheenergysectorarethedata

relatedtoU.S.andCanadianRailTraffic. AccordingtotheAssociationofAmericanRailroads,

althoughtotalU.S.railtrafficisup1.0percentforthefirst12weeksof2013(endingMarch23,

2013),rail

traffic

for

petroleum

and

petroleum

products

is

cumulatively

up

57.3

percent

in

the

UnitedStates. Likewise,railtrafficinCanadaforpetroleumandpetroleumproductsisup29.7

percent(seeExhibits16and17)forthefirsttwelveweeksof2013.

Exhibit17

Exhibit18


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Currentoilpipelineinfrastructuremaynotbeabletomeetdemandasindicatedbyincreasing

petroleumproducttransportationbyrail.

IfthetrendintheincreaseofU.S.andCanadianrailtrafficforpetroleumandpetroleum

productsmaintains

its

current

pace

for

the

rest

of

2013,

it

would

result

in

an

estimated

additional468,000railcarloadsofpetroleumproductsin2013comparedto2011.

Factoringanaveragerailtankerlength,these468,000railcarswouldcreateatrainof

petroleumproductsstretchingfromWinnipeginthenorthtoHoustoninthesouth. Forthe

firstquarterof2013comparedto2011,anadditional1,284extrarailcarswererequiredeach

daytotransportpetroleumproductsintheUnitedStatesandCanada(SeeAppendixERail

TrafficEstimatesforPetroleumandPetroleumProducts).

Theconclusionisthat,factoringmarketdemandforpetroleumproductsandthestateof

currentenergytransportationinfrastructure,anincreasingvolumeofpetroleumproductsare

beingmovedbyrail.

Ontheonehand,itcouldbearguedthatrejectingtheKeystoneXLPipelinewillnothavea

majorimpactonthemovementofoilbetweentheUnitedStatesandCanadabecauseof

marketdemandandtheabilitytomoveoilbyrail.Ontheotherhand,onecouldalsoarguethat

thepipelineonlyenablesgreateraccesstotheU.S.marketandthattheOilSandsbitumenwill

stillhavetocompeteinthemarketplace.TheapprovalorrejectionoftheKeystoneXLPipeline

maynotnecessarilydelivertheoutcomeshopedforbybothitsadvocatesanddetractors.

Exhibit19

EstimatedLengthofTrainRequiredtoCarryAdditionalPetroleumProductsin2013comparedto2011

(Oneyearsupply)


37/83


10.0RENEWABLES,SHALEGASANDDIGGINGINTOTHEPROJECTIONSTheexpertsintheeliteconsultation,byasmallmargin,hadconfidenceintheInternational

EnergyAgencyinthe2013WorldEnergyOutlookprojections7. AccordingtotheIEAprojections

theUnitedStatescould,inthefuture,becometheworldstopproducerofoilandnaturalgas,

andpossibly

become

anet

natural

gas

exporter

by

2022

and

anet

oil

exporter

by

2030.

However,anumberexpressedconcernaboutthereliabilityofestimatesoncefactorswere

takenintoconsideration,suchaspossiblefutureregulation,yettobedevelopedtechnology

andthestrengthoftheU.S.economy.

Thetwinpillarsofgrowingrenewableenergy

sourcesandnewlydiscoveredshalegashave

alteredtheenergylandscapefromoneof

ingrainedperceptionsofenergydependenceto

oneofenergyopportunity.

Acentralpartoftheenergytransformation

narrativehasalsoincludedtheembraceofrenewableenergysuchaswind,solarand

geothermal.Muchoftheappetiteforrenewable

energyprojectshasbeenfueledbythedesirefor

whatsomecallalowcarboneconomy.

Thediscoveryofsignificantamountsofshalegasin

theUnitedStatesandaroundtheworldisoneof

thekeytriggersinthelandscapeofchange.Many

factorsincludingtheabundantsupplyofshale

gas

and

its

proximity

to

markets

in

the

United

StatesallpropelanarrativeofenergytransformationintheUnitedStates.

Althoughrenewableenergysourcesandnaturalgas

havebeentoutedaspositivemovestowardenergy

independence,bothhavealsoincitedsomecontroversy.Forshalegasdevelopment,concerns

relatedtothefrackingprocess,includingitsimpactonwaterandthespeculationthatthe

processmaybelinkedtoearthquakes,havebeenapartoftheemergingpublicshalegas

narrative.Likewise,evenforrenewableenergysourcessuchaswind,claimsaboutthepossible

negativehealthimpactsonresidentswholivenearwindfarmshavealsodampenedthe

generallypositive

narrative

on

renewable

energy.

Settingasidetheissuesrelatedtotheenergycreationprocess,anexaminationoftheestimates

relatedtothelongtermenergyoutlooksuggestthatthereareaseriesofuncertaintiesinthe

projectionsthatmeritgreaterattention.

Sources:NBCNews(September26,2012),CNBC

(March9,2013)


38/83


10.1 Projections at a Glance

ListedbelowareprojectionsfromtheU.S.EnergyInformationAdministration(EIA)overthe

pastdecade.Exhibits20and22aretheprojectionsfromthe2003EIAEnergyOutlookReport

andExhibits19and21aretheprojectionsfromthe2013EIAEnergyOutlookReport.Thereare

aseries

of

key

observations

with

policy

implications,

which

are

outlined

below.

Exhibit20 Exhibit21

Exhibit22 Exhibit23


39/83


10.2 Observations Related to Growth

ConsumptionGrowthProjectionsAdjustedProjectionsonU.S.annualenergy

consumptiongrowthhasbeenadjusteddownwardfrom1.5percentin20038to0.3

percentin20139bytheU.S.EnergyInformationAdministration.

ImportanceofConsumptionPromotinglessconsumptionofenergyisakeyfactor

inthefutureenergylandscape,especiallywhenoneconsidersthepolicyobjectives

ofreducingGHGemissionsandachievingenergyselfsufficiency.

RenewableEnergyGrowthRenewableenergysourceshaveundergonesignificant

growthsince1980.In2010,renewablesrepresented8percentofU.S.primary

energyconsumption,butevenby2040,itisestimatedthattheywillcompriseonly

11percentofprimaryenergyconsumptionintheUnitedStates.

RenewableEnergyImpactCategorygrowthforrenewableenergyisstrong,buta

significantabsoluteshareofrenewableenergysourceswouldrequiremajorpolicy,

market,ortechnologicalchangestohaveameaningfulimpactontheenergymix.

10.3 The Uncertainty of Long-Term Projections

Projectingenergyconsumptionandproduction20or30yearsintothefutureisachallenging

endeavorunderanycircumstance. Althoughdataareusuallypubliclypresentedinthemedia

asafixednumberintermsoftheprojections,theU.S.EnergyInformationAdministration

presentsfiguresintermsoflow andhigheconomicgrowthestimateswithareference

number10.

Likewise,the

National

Energy

Modeling

System

is

amarket

based

approach

subject

toregulationsandstandards11

andislimitedinitsabilityfactorthefuturepotentialimpactsof

technologicalchangesonresourceextractionproduction,oryettobeenabledfederalorstate

legislation. Thereareaseriesofanticipateduncertaintiesrelatedtomanyofthelongterm

projectionsinthepublicdomain.

EconomicUncertaintiesAdjustmentstoassumptionsrelatedtoeconomicgrowth

haveasignificantcompoundingeffectonlongtermprojections. Likewise,modelingfor

unforeseeableevents,suchastherecessionof2008orapotentialeconomicrecovery,is

difficult.

PolicyUncertaintiesOnecanassume,allthingsbeingequal,thatthepolicylandscape

relatedtoenergyandtheenvironmentmayonlychangeincrementallyforthepurposes

ofthelongtermmodeling. Policychanges,however,canhaveanimpacton

consumptionandproduction. Forexample,theintroductionoftoughervehicle

emissionsstandardsintheUnitedStateshasbeenasignificantfactorininfluencing

consumption. Likewise,futurefederalandstatepoliciesthatencouragechangesto


40/83


eitherenergygenerationorvehicleemissionscouldhaveamaterialimpacton

projections.

ExplorationandTechnologicalUncertaintiesThediscoveryorabilitytorecover

significantshalegasandoilthroughnewtechnologyhasanimpactontheenergy

market.

Asrecently

as

adecade

ago,

the

scope

of

the

shale

gas

recoverable

was

unknown.Thesetechnologicaldiscoveriescanhaveasignificantimpactonprojections.

Togethertheseuncertaintiesunderscorethatlongtermprojectionsaresubjecttoasignificant

numberofexternalvariablesthataredifficulttomanage.

10.4 Measurement Uncertainty

Themethodologyforprojectionspresentsanothersignificantuncertaintyinprojectingfuture

energyproduction.Whereasmorematuresourcesofenergyhavefairlyrobustmeasurement,

thevariationinmeasurementofshaleandconventionalgas,forexample,pointstoakeyissue

relatedtothefocusofanaverageestimate.

TheU.S.GeologicalSurvey(USGS)initsregularNationalAssessmentofOilandGasResources

reportsestimatesforindividualassessmentunitssuchasSouthernAlaska,SanJuanBasin,and

theMontanaThrustBelt.Ofnote,theUSGSreportsprojectionsforindividualassessmentunits

betweena95 and5 percentprobabilityrangeaswellasthemean(average)value. An

examinationofUSGSindividualassessmentunitsforconventionalgassuggeststhatthereis

likelyagreatervarianceofestimatesinmanyofthemorerecentgasdiscoveries.

Exhibit24

ExaminationofRangeofEstimatesforConventionalGasof

U.S.Geological

Survey

Assessment

Units

ProvinceNumberandName Vintage

ConventionalGas*

Potential

Rangefor

Conventional

Gas

Potential

Rangefor

Conventional

Gasin

MultiplesUncertainty

Factoring

Multiples(trillionsofcubicfeet)

(trillionsof

cubicfeet)(F05F95)

F95** F05** Mean

***

28 CentralMontana 1995 0.40 1.37 0.84 0.97 3.4 Low

4749

Gulf

Coast

2012

40.7

309.3

153.28

268.6

7.5

Medium

1b NorthSlope,NPRA 2010 6.75 114.36 52.84 107.6 16.9 High

*Conventionalgasincludesnonassociatedandassociateddissolvedgasresources.

**95 and5 percentprobabilityrange.

***Mean/averagecalculationsbytheUSGSarenotbasedonaperfectlynormaldistributionandhavebeenadjustedbasedonthe

historicalexperienceoftheUSGS.


41/83


Exhibit24illustratesthepotentialrangeofresourcesinindividualUSGSassessmentunits. For

example,theNorthSlopeNRPAassessmentunitinAlaskahasanestimatedmeanof

conventionalgasofapproximately52.84trillioncubicfeet,buttherangecouldbeaslowas

6.75trillioncubicfeetorashighas114.36trillioncubicfeet(atotalrangeof107.6trillioncubic

feetofconventionalgas),amultiplewherethehighestimateisalmost17timesthatofthelow

estimate.The

North

Slope

NPRA

is

ayounger

vintage

(2010)

than

the

Central

Montana

USGS

assessmentunit(1995). Onecanseethatthepotentialrangeistighterandthepotential

variancebasedinmultiplesismuchlowerinthe1995vintageCentralMontanaassessmentunit

(only3.4timesthatofthehighestimate).

AlookattheundiscoveredgasintheEastCoastMesozoicBasinalsoillustratestherangeof

estimates.Forexample,accordingtotheUSGSAssessmentofUndiscoveredOilandGas

ResourcesoftheEastCoastMesozoicBasinsofthePiedmont,BlueRidgeThrustBelt,Atlantic

CoastPlain,andNewEnglandProvinces(2011),theSouthNewarkBasinreportsamean

estimateof876billioncubicfeetofgas;however,therangeisbetween363billioncubicfeet

and1,698billioncubicfeetarangeof1,335billioncubicfeetoramultiple4.6timesbetween

thelow

and

high

estimates.

Exhibit25

USGeologicalSurveyEstimatesforEastCoastMesozoicBasin(2011)

Theuncertaintyrelatedtomeasurementissuesforthenewervintageassessmentareasforgas

willbesettledovertime.Cautionshouldbeexercisedintermsofpolicymakingconcerning

assumptionsonconventionalandunconventionalgasestimatesthatarebasedonmean

calculations,which,ineffect,isarangeofvaryingmagnitudes.

AlthoughtheUSGSfocusesonindividualassessmentunits,theseestimatesarethebuilding

blocksforthelongtermenergyforecastscreatedbyotheragenciesandorganizationsthattend


42/83


toreportonvariancesrelatedtohighandloweconomicgrowthvariances,asopposedtothe

probabilityranges.Thelimitsofmodelingforlongtermhorizons,astheyrelatetoyettobe

designedorenabledenvironmentallegislationorchangesinpublicopinion,underliethe

uncertaintyintermsofthelongtermprojections.Itshouldberecognizedthatthemodelingis

stillthebestalternativeinanimperfectworld;however,limitationsshouldberecognized.A

focuson

ashorter

term

outlook

can

better

manage

these

non

measurement

uncertainties.

Onecouldask,whatisthepolicyimpactofmeasurementlimitations?Themodelingand

estimatesforenergybytheirdesignareincrementalinnaturebasedoncurrentknowns

(federalandstatepolicy,thehealthoftheeconomy,discoveries,andtodaystechnologies)

becauseitisdifficulttofactorunknowns.Onedoesnotknowwhetherlongerterm

incrementalprojectionsinfluencepolicymakerstoleantowardincrementalpolicydecisions.It

isknown,however,thatnewenvironmentalpolicydecisionsatthefederalandstatelevelcan

haveasignificantimpactonthelongtermprojectionsandbehaviorrelatedtoconsumption

andproduction.


43/83


11.0PathForward

Thispaperhasthreecentralconclusionsdrawnfromtheinputoftheeliteconsultations,the

U.S.andCanadianpublicopinion,andareviewofthedatainthepublicdomain.

Decentralizedpolicymakingforenergyandtheenvironment.

The challenge for energy and environmental policy making is

that issues do not respect borders, and the current level of

partisanship can be an obstacle to moving forward. In this

policy environment, governments increasingly adopt or adapt

the policies of others building policy coalitions rather than

lookingtocentralisednationtonationsolutions.

Energysourcesshouldcompetetoenvironmentaltargets.There is risk in picking winners and losers on 20 and 30 year

projectionsthat

cannot

factor

for

technological

change

or

yet

to be introduced environmental legislation. However,

government can play a role in encouraging and investing in

technological innovation for a diversity of energy sources.

Withthisapproach,differentenergysourceswouldcompeteto

yieldthebestmarketandenvironmentaloutcomes.

BeginadialoguetosupportaUnitedStatesCanadaNationalCarbonPolicy.Building a framework for a carbon policy is a key opportunity for energy and

environmentalpolicymaking.

This

is

especially

true

because of the policy

interests and jurisdictional

rolesofstates/provincesand

federal governments on

energyandtheenvironment.

Even with the limitations of the current political atmosphere in Congress and

increasinglyactiveatthestateandprovincial levelsofgovernment,aNationalCarbon

PolicydialoguebetweentheUnitedStatesandCanadawillneedtotakeplace.


44/83


Appendix A

Project Methodology


45/83


Project Methodology

Amultifacetedresearchstrategywasadministeredforthispaper.Itincludedexamining

researchinthepublicdomaininthefieldofenergyfromsourcesrangingfromtheU.S.

GeologicalSurveyandtheU.S.EnergyInformationAdministrationtotheInternationalEnergy

Agency.

Theresearchwasnotsponsoredorfundedbyanyorganizationorcompany,butshouldbe

consideredpartofanindependentscholarinresidenceprogramwiththeWoodrowWilson

InternationalCenterforScholars.ThecostsforthequantitativestudiesweredonatedbyNanos

AmericaandtheNanosResearchCorporationinCanada.

Therewerethreemaintracksfortheresearch:

PublicopinioninCanadaandtheUnitedStates;

MediaanalysisintheUnitedStates.;and,

Keyinformant

opinion

in

the

United

States.

U.S. Public Opinion Survey

AnationalrandomtelephonesurveywascompletedbetweenMarch28andApril7,2013,of

1,007Americanadults. TheRDD(randomdigitdialled)sampleincludedacombinationofland

entering the energy and environment policy frontier

Documents