07/08/2013 10:05 am ET Updated Sep 07, 2013

A Novel Approach to Keystone XL

Last month, Barack Obama promised that he will not approve the controversial Keystone XL pipeline if it "significantly exacerbates the problem of carbon pollution" that is threatening our planet.

In the words of Van Jones, former White House green jobs adviser: "I think the president gave a very encouraging wink and nod to environmentalists on this issue."

But, a lot may depend on the State Department's final review which is expected to come out in a few months time, with Obama expected to make his ultimate decision later this year.

In March, the State department upset the environmental community when it said that the pipeline will not accelerate the pace of global warming.

The pipeline hopes to transport "dirty" fuel from the Canadian tar sands down to refineries in the Gulf of Mexico. But, such oil releases three to four times more carbon emissions than conventional fossil fuels because it requires huge amounts of energy to both extract and transport.

"To say that the tar sands have little climate impact is an absurdity. The total carbon in tar sands exceeds that in all oil burned in human history," says James Hansen, Nasa's former top climate scientist.

In fact, if we are to burn all of that oil it will raise global temperatures by a further 0.4 degrees Celsius. That marks half of the warming already experienced by our planet.

And, as founder Bill McKibben points out: "Mother Nature filed her comments last year." Her comments were perhaps most audible when super storm Sandy whiplashed across the northeastern seaboard to leave much of New York City submerged under water.

Creating surreal scenes reminiscent of a Hollywood blockbuster, Sandy marked a time when the climate crisis became real for many people. It came during the hottest year in U.S. history, two years after the planet's warmest decade since measurements began in 1850.

Moreover, according to the World Bank, things are only going to get hotter, much hotter. It says that our planet may warm by up to four degrees Celsius within the next 50 years. This will usher in changes not seen since the last Ice Age.

With so much at stake, it's easy to see how the Keystone pipeline has come to represent such an emotive issue in the fight against climate change. In the words of climate scientist Jason Box: "If Obama authorizes this pipeline, it will prove that the power of oil is greater than the power of reason."

But, an academic from Norway has now come up with a novel approach to the problem.

According to Bard Harstad, recent winner of the prestigious environmental economics Erik Kempe prize, governments across the world should pay Canada to keep its tar sands oil in the ground.

"I know it sounds weird", says Hardstad in an interview with the Financial Times, but it's cheaper than trying to clean up the carbon emissions that such a project would release.

His idea makes even more sense when put in the wider context of global efforts to secure a new international green deal in 2015.

Now that China and the U.S., the world's two largest economies and biggest emitters, are committed to reining in their own emissions at home, the prospects of a new international treaty look much brighter when compared to a few years ago.

Last month, Obama and China's Xi Jinping signed a historic deal to curb highly polluting HFC's from refrigerators and air conditioners.

And, the two nations are now locked a new competition to become the world leader in the clean energy race, with Beijing currently out in front after stealing the lead earlier this year.

But, as Hardstad points out, even if the U.S. and China manage to spearhead a new global green deal, one of the problems that will invariably arise will be the issue of "carbon leakage."

The term refers to punitive carbon restrictions in one country forcing companies to relocate to other nations with more relaxed rules. This means that overall global greenhouse gas emissions will remain the same, if not higher.

In his report, Hardstad concludes: "Countries outside of the coalition" will only consume more fossil fuels as the coalition reduces its demand for this resource, which in turn makes it cheaper on world markets. This will encourage nonparticipating nations to stock up, and burn even more cheap fossil fuels.

And, with little incentive to invest in renewable energy, these countries will develop enormous carbon footprints, taking our planet several steps closer to catastrophic climate change.

In order to side step around the problem, Harstad suggests that the new treaty should develop a new system whereby nations can buy fossil fuels from other countries and effectively pay them to keep them in the ground:

"The coalition can then reduce its own supply marginally without fearing that non participants will increase theirs. Consequently, the consumption price is equalized across countries, as are the marginal benefits from consumption."

"The policy lesson is that purchasing fossil-fuel deposits, with the intention of preserving them, may be the best possible climate policy."

He says that if enough countries were on board, overall carbon emissions would be radically reduced. And, the price of polluting fossil fuels would not be distorted, encouraging further investment into renewable energy.

Harstad's idea isn't so different from Norway's current efforts to pay Indonesia $1 billion to stop tearing down its trees. Deforestation is thought to contribute up to 17 percent of global warming as trees store carbon which is then released back into the atmosphere when they are chopped down.

Perhaps this academic from Norway has come up with one of the many novel solutions that our world will require to stave off the worst effects of man made climate change. In Obama's own words:

"That bright blue ball rising over the moon's surface, containing everything we hold dear -- the laughter of children, a quiet sunset, all the hopes and dreams of posterity -- that's what's at stake. That's what we're fighting for. And if we remember that, I'm absolutely sure we'll succeed."