Keystone XL must not lead to increase in emissions: Obama

Authorities should only approve TransCanada's Keystone XL pipeline if they're certain it won't "significantly exacerbate" greenhouse gas emissions, U.S. President Barack Obama said Tuesday as he unveiled a national plan to combat climate change.

In a highly anticipated speech on his second-term climate objectives, Obama weighed in on Keystone despite suggestions he would steer clear of the controversial project because it's in the midst of a State Department review.

A determination that building the northern portion of Keystone XL will not result in greater greenhouse gas emissions "is absolutely critical in determining whether this project will be allowed to go forward," Obama said to cheers from the crowd gathered on a steamy day at D.C.'s Georgetown University.

The pipeline must be found to "be in our nation's interest," he added.

• Key questions on the Keystone XL oil pipeline project

Keystone XL has become a flashpoint for U.S. environmentalists, who have branded it a symbol of "dirty oil" and have spent the past two years mounting a fierce public relations battle against the project. The pipeline would transport millions of barrels of oilsands bitumen a week from Alberta to Texas refineries.

Canada's Natural Resources Minister Joe Oliver said Tuesday that the Keystone project is "unlikely to have a significant impact on the rate of development in the oilsands, or on the amount of heavy crude oil refined in the Gulf Coast area."

Oliver, who calledKeystone the most "studied pipeline in the history of the world," told reporters that the project will create jobs and economic growth on both sides of the border and increase North American energy security.

"This project is in the national interest of both our countries," Oliver said.

TransCanada has been pouring money into lobbying efforts in the U.S. capital in recent months. The company's CEO, Russ Girling, said recently that he's confident Keystone XL will ultimately win approval.

The Calgary-based company saidin a statement Tuesdayit was pleased with Obama's comments setting out criteria for pipeline approval.

"If Keystone XL is not built, it's clear that the oil will move to market by truck, rail and tanker, which will significantly add to global greenhouse gas emissions to move the product," the company's statement said. The company also said the pipeline will "operate with virtually no emissions" and will have a "limited impact" on resources along theproposed route.

Further, TransCanada said, the oil from Canada and some U.S. states that will be moved through the proposed pipeline will "displace heavier crudes from the Middle East, Mexico and Venezuela and will move in a pipeline that is far safer than any other option that exists today."

On Tuesday, some interpreted the president's remarks differently.

"The reference to the Keystone XL pipeline doesnt bode well for pipeline proponents," John Bennett, executive director of Sierra Club Canada said in a statement.

"Stating approval could only happen if it didnt lead to an increase in greenhouse gas emissions is clearly a death sentence for Keystone its an impossible task," Bennett said.

The draft environmental report on the pipeline by State Department officials,released in March,suggested Keystone XL's impact on greenhouse gas emissions would be minimal. The powerfulEnvironmental Protection Agencylater questioned that finding.

TransCanada officials have said that even if Alberta oilsands production doubled, the carbon emissions would be "immaterial" to global greenhouse gas levels. They say Canada accounts for only two per cent of global greenhouse gas emissions, and the oilsands make up only five per cent of that total.

Obama rejected the pipeline in early 2012, but invited TransCanada to file a new application with an altered route that would skirt Nebraska's ecologically sensitive Sand Hills region. TransCanada did so, earning the thumb's up from the state of Nebraska.

A final State Department decision on the $7.6-billion project is expected this fall. After that, it will be up to Obama to bless or block Keystone XL.

New climate change regulations

The president's comments came as he provided details of new U.S. climate change regulations that will cut carbon emissions at power plants and require federal projects to better prepare for the sort of extreme weather that has left much of Calgary underwater.

He'll use his executive authority to implement most of the proposals, bypassing congressional lawmakers reluctant to move on climate change.

Obama is directing the EPA, for example, to initiate regulations on carbon emissions from existing coal and gas-fired utilities by next June, and to kickstart similar rules on new power plants. And he'll ask the Interior Department to issue permits for new wind, solar, and other renewable energy projects on public lands in efforts that could fuel more than six million American homes within seven years.

New energy-efficiency projects are also a big part of the plan proposals that could present major opportunities for Canadian biofuel companies. The plan also calls for more forceful action in boosting efficiency for appliances such as refrigerators and lamps.

He's also instructing federal agencies to help state and local governments with existing problems caused by climate change, including improved flood protection for roads and other infrastructure, better hospitals to respond to deadly storms, and drought relief.

Focus on coal

Obama's new plan, with its major focus on reducing carbon emissions at coal plants, caused coal stocks in the U.S. to drop shortly after the market opened. Coal producers and some electric utilities have warned that Obama's proposals will mean higher energy costs for consumers.

Mitch McConnell, the Senate minority leader, said Obama's plan is a "war on coal" that means a "war on jobs."

"It's tantamount to kicking the ladder out from beneath the feet of many Americans struggling in today's economy," McConnell said in a statement.

Environmentalists on both sides of the border, meantime, cheered Obama's words, especially on Keystone XL.

"We applaud the president for also firmly stating that the Keystone XL pipeline should not be built if it means more pollution and more damage to our shared climate," Hannah McKinnon of the Toronto-based Environmental Defence organization said in a statement.

"The Keystone XL tarsands pipeline is a gateway to tarsands expansion and the scientific community agrees that, if built, tarsands pollution will soar."

Keystone proponents, on the other hand, urged the president to "look at the facts."

"In fact, if Keystone XL isn't built, global greenhouse gas emissions are likely to increase because more oilsands crude would be refined in countries like China, where current emissions standards allow three times more sulphur dioxide than in the United States," said a statement from a group known as Oil Sands Fact Check, whose website says it is supported by a broad coalition of organizations and interests.

"Canada accounts for only two per cent of global greenhouse gas emissions and emissions from oilsands are a small fraction of that."

New Democrat MP Megan Leslie said that while Obama's position on Keystone is now a lot more clear, the question remains as to who will determine whether it actually increases emissions.

"On the one hand, that was a really clear statement about Keystone," Leslie said. "But on the other hand, it's not so clear, because how will that be determined? Who will be determining it? I think we're still in a little bit of a wait-and-see."

Environment Minister Peter Kent was not immediately available to comment on Obama's speech.