Obama buys wiggle room

Keystone XL price set

In announcing his plan to restrain climate change Tuesday, United States president Barack Obama effectively named his price for approving the Keystone XL pipeline: no net increase in greenhouse gas emissions.

The surprise reference to the Canadian project was made in a speech at Washington’s Georgetown University, where he announced long-expected mandatory reductions of greenhouse gas emissions by operators of power plants, the biggest single source in the U.S., while continuing to promote green energy.

“This does not mean we are going to suddenly stop producing fossil fuels,” Mr. Obama added. “But our energy strategy must be about more than just producing more oil. And by the way, it’s certainly got to be more than just building one pipeline.

“I know there has been, for example, a lot of controversy around the proposal to build the pipeline, the Keystone pipeline, that would carry oil from Canadian tar sands down to refineries in the Gulf and the State Department is going through the final stages of evaluating the proposal. That’s how it’s always been done.

“But I do want to be clear. Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward.”

For Canada, the explicit naming of the condition has good and bad implications.

The good news is that Canada, which has been waiting for five years for the project’s approval amid endless foot dragging by the President, finally knows what it will take to get to the finish line.

Proponents have lots of fodder to argue the pipeline meets the President’s climate change expectations:

Emissions from the oil sands are negligible — 0.1%, or one one-thousandth, of global emissions, or less than half of emissions from coal plants in Illinois and just one-fortieth of coal emissions in the U.S., as federal Natural Resources Minister Joe Oliver likes to point out.

Canada will reduce those even more through imminent new regulations directed specifically at the oil and gas industry.

Meanwhile, the province of Alberta, which is already charging oil sands operators a carbon tax, is on the cusp of further tightening the screws.

“We are encouraged that the State Department’s draft Supplementary Environmental Impact Assessment concluded Keystone XL would not increase greenhouse gases,” Alberta Intergovernmental Affairs Minister Cal Dallas noted in a statement.

Canada can argue that oil in the pipeline would not re- sult in new emissions because it’s displacing similar oil coming from other sources such as Venezuela, Nigeria or Saudi Arabia.

The American Petroleum Institute said: “the State Department has already found that Keystone XL will have no impact on the climate because Canada will still develop its oil sands.

“In fact, if Keystone XL isn’t built, global greenhouse gas emissions are likely to increase because more oil sands crude would be refined in countries like China where current emissions standards allow three times more sulfur dioxide than in the United States.”

Now, the bad news: By linking approval of Keystone XL to climate change impacts, rather than decide whether it warrants a permit on its own merit, Mr. Obama has handed opponents what they wanted: a big fat platform to debate the oil sands, their growth plans, transportation options, and export markets.

As one Washington observer put it: Time kills all deals, and President Obama is stretching this one out as long as he can.

Opponents didn’t miss a beat.

“The only way this project passes the president’s test is to claim that just as much tar sands crude would be produced without the pipeline — that there might be some other way to ship it out of Canada,” Washington-based Susan Casey-Lefkowitz, director of the international program at the Natural Resources Defense Council, said in a statement.

“That can’t happen, as more and more evidence affirms. This is why we need the State Department to conduct a full and thorough review.”

President Obama was expected to hand down a decision on a permit before the end of the year, and the momentum seemed to be in the pipeline’s favour.

With his popularity sagging and mid-term elections coming up, a climate change plan focused on the real big U.S. emitters, coal fired plants, could have given President Obama the opportunity to approve Keystone XL and move on. Instead, it looks like he’s giving himself plenty of wiggle room to keep open his favourite option: delay.