Joe Romm unintentionally poses an interesting question here . He focuses on the carbon production implications of the Keystone Pipeline. He is right to raise the old issue that if the oil in the Canada tar sands stays in the ground then this will reduce global GHG emissions. But, we knew that. A more interesting question is to ask; "given that a pipeline is an irreversible investment of 7 billion dollars, will the investors regret this investment if a global carbon treaty is enacted next year?"
Who bears the incidence of carbon taxes? Is it the buyer of fossil fuel or the sellers of fossil fuels? Does the expectation of an international deal shift fossil fuel infrastructure investment patterns?
In the medium term, I would expect that the demanders of fossil fuels (so car drivers and electric power consumers) will pay higher prices.
While Al Gore argued that a carbon tax will quickly mean that companies such as Exxon have billions of dollars of stranded assets, in reality such taxes will only slowly rise and if fossil fuel sellers anticipate that carbon taxes will continue to rise in the future then this tax on their future revenue will provide them with an incentive to sell their oil now. In this case, the tax pattern actually accelerates the short term GHG emissions as the fossil fuel companies "cash out". In general equilibrium such actions will lower global fossil fuel prices and will reduce the diffusion of electric cars in the short run.
Will the fossil fuels say in the ground? In a world of 7 billion people where each of them would like to have the same energy consumption as the typical American, I doubt it.
What if China is serious about decarbonizing? Doesn't that mean that there will be less demand for Keystone oil? Oil is sold on a world market and China is 15% of world GNP. There are many other "thirsty" nations looking to motorize.