Lester Brown will close the Earth Policy Institute (EPI) at the end of June. He will retire and EPI will cease to function as a global environmental think tank. I was sad to hear this but understand his rationale. Lester is 80 and good for him to recognize it’s time to step down and move on. (I wonder if others have that foresight? – Hah!) I wanted to take a moment to recognize his contribution before introducing a worthy successor, Amory Lovins, founder of the Rocky Mountain Institute. I will finish this column with one final comment on the Keystone XL pipeline.

Lester Brown has had a significant influence on my thinking and I consider him one of my mentors. I have read most of his books, listened to many of his presentations and watched him on television.  His message on sustainable development has never wavered. If you think carefully about the concept of extended producer responsibility (EPR) you’d realize that the basic tenet came from his philosophy:  you make it and, therefore, you are totally responsible for that product from beginning to end. You build culture, agriculture and products, always with that responsibility in mind. Scotch Tape is wonderful, except it doesn’t have an end of life. Ergo, 3M needs to develop polymers that allow for an acceptable end of life for any product it brings to market.  Tough thinking? You bet. But that is exactly the thinking that Lester espoused over the years.

Lester Brown graduated from Rutgers University in the 1950s. He began his career as a tomato farmer in New Jersey. In 1956, he worked on farms in India under the auspice of the International Farm Youth Exchange. His time there changed his worldview and ultimately hastened his career trajectory. 

In 1959, Brown joined the US Department of Agriculture’s Foreign Service as an international analyst and eventually became an advisor to then Secretary of Agriculture, Orville Freeman. In 1966, Secretary Freeman appointed him Administrator of the Department’s International Agricultural Development Service when he managed USDA’s technical assistance programs in 42 developing countries. In 1969 he left government to help establish the Overseas Development Council.  In ’74, with support of the Rockefeller Brothers Fund, he founded the Worldwatch Institute, the very first research institute totally focused on analyzing global environmental issues. It was during this time that he wrote Building a Sustainable Society which focused on the concept of sustainable development and producer responsibility.

Around 2000, Lester left Worldwatch to found and run his own institute, EPI, which has provided, over the last 15 years, a vision and roadmap for creating an environmentally sustainable economy.

I can’t say enough about Lester Brown. He gets it. He doesn’t just talk the talk, he walks the walk and has influenced countless people, cultures, industries and countries. His contributions will be recognized and realized for generations. Thank you, Lester, for guiding me and many others over the years. We are all better because of your ideas and influence. (For those not familiar with Lester Brown’s writings, I suggest you read two of his books: Eco-Economy and Plan B.  They are outstanding!)

I met Amory Lovins about five or six years ago. Amory is the founder of the Rocky Mountain Institute (RMI) in Colorado. He calls himself  “Chief Scientist” but he’s the guy writing, lecturing, postulating and guiding the RMI mission to drive “efficient and restorative use of resources.” I see this as an extension of Lester’s work and focus, although RMI is more focused on renewable and alternative energy.  That’s Amory’s hot spot, his passion and mine as well.  You can obviously Google RMI for more information and I hope you will.  Therefore, I won’t spend any time describing RMI activities and details. For the remainder of this column I’d like to take one more shot at the foolhardy Keystone XL pipeline project. I promise, this will be my last salvo, as I have written, criticized, cried and cajoled for way too long without any tangible results. Maybe no one’s listening, maybe no one cares.  But I do and so does Amory Lovins.

The extraordinary developments over the last 90 days on the price of oil make the economics of the pipeline totally impossible. I’ll come back to this. To start, from my point of view, the Canadians are attempting to build a market campaign for the XL pipeline to happen, at our expense, at the expense of Americans. I don’t like it one bit.

“This project is a political project. It makes no environmental sense. It makes no economic sense.”

About fifteen years ago, Trans-Canada, the primary provider of tar sand production in Alberta, pitched a scheme to harvest heavy, high sulfur crude, bitumen, in south central Alberta to the Canadian government. The Canadian government grabbed the bait hook, line, and sinker and has tried ever since to convince America that the virtues of a supply of crude from a friend, Canada, will make the US totally independent of Far Eastern oil, from places like Saudi Arabia, (independent even from Mexico and unfriendly countries like Venezuela). The region has plenty of tar sand, but there are several problems to overcome: first, the crude must be refined. Do you ship to BC and on to refineries in China? Or, could the Canadians convince the Americans to put in a 2,000 mile pipeline from Alberta to Houston where refining capability exists and where there is access to global markets? Mind you, to move the heavy crude you have to blend (cut) it with hydrocarbon solvent to dilute it. (No one ever mentions this. Can you imagine a pipeline rupture with that chemistry spilling into the groundwater in Nebraska!) So a major hurdle for the oil industry is transportation of crude from Alberta to a refining capacity, hence the Keystone XL pipeline.

Second, neither the Canadians nor the oil industry have talked about the magnitude of the negative aspects of the manufacturing process. Compared to traditional oil drilling, or even hydraulic fracturing (fracking), the extraction and conversion of tar sand into crude is incredibly invasive. It is energy intensive, it increases carbon intensity and generates by-product that sits in holding ponds for God knows how long.  I suppose when oil was $100/barrel you had the possibility of a marketing story. But today, at $50/barrel and below, it is a very long stretch, at best.  If the Keystone XL pipeline is approved, and I predicted last month that it will be, it will take at least 2 years to complete. By then, as Amory Lovins notes:

At today’s halved oil prices, many mostly built projects may be completed despite dismal or no returns to capital. The remaining investments to finish them, plus bare operating costs, let owners hang on until prices rebound. If that actually happens, this survival strategy substitutes misery for outright loss.

I love that! But listen to the punchline:

Producers also say that by 2017, when KXL could come online if approved this year, old projects output will start to dwindle and growth will increasingly require new projects in discovery phase. Roughly 99% of those projects need $100 – 130/barrel oil prices.

And, what both Amory and Calvin recognize is the rest of the story, as Lester is wont to say, the $100 – 130/barrel figure assumes that neither the Canadian nor Alberta government will make the manufacturers clean up their mess! If this were to happen, add another $50/barrel and the whole financial model is out the window. Citibank, in a September report, said:

Ninety percent of future oil sands projects are at risk from the eroding oil price.  Investors in Canadian oil sands are at a heightened risk of wasting $271 billion (that’s right, $271 billion!) of funding on projects in the next decade that need high oil prices of more than $95/barrel to be profitable.

The Los Angeles Times, in mid-December, reported:

Amid the shouting on Capital Hill, the wash of campaign cash and the activist careers shaped around the Keystone XL pipeline, the project at the flashpoint of America’s energy debate now confronts a problem bigger than politics. It may no longer pencil out . . .  industry analysts are questioning whether the plan to link Canadian tar sand with Gulf Coast refineries makes sense.

And, finally, Rupert Murdoch, no less, tweeted:

Is the Keystone pipeline really a good idea? Bringing lots of heavy, dirty oil across country, when fracked, cheaper, cleaner energy is available.

This project is a political project. It makes no environmental sense.  It makes no economic sense.  Amory, refers to the “energy gods” looking down at the entire project with “ironic humor.” I, on the other hand, look on in anger. It is preposterous and idiotic. The jobs it’s touted to create are short term with only 100 permanent jobs. The chance for a spill is very real. The economics, particularly in light of current pricing, screams of illogical thinking. Amory finishes his commentary “What if Nobody Came to the Keystone XL Pipeline Party:”

Wouldn’t it be ironic if Trans-Canada built its pipeline just in time for tar sands companies to be too weakened and uncompetitive to fill it? The energy gods would chortle again. Such fools these mortals be!”

In late January, the World Economic  Forum met in Davos, Switzerland.  The focus was on climate change and the need for green technology to fight global warming and poverty.  On the one hand we are making a sincere effort to make changes that will reduce gas emissions and limit emissions from carbon dioxide and other heat trapping gases, like methane.  On the other, international oil manufacturers are trying to bully their way into a polictical situation to move an invasive energy source from point A to point B. I don’t get it. Totally incongruous.

Amory is right – such fools these mortals!

Another Letter from the Earth.




Calvin Frost is chairman of Channeled Resources Group, headquartered in Chicago, the parent company of Maratech International and GMC Coating. His email address is [email protected].