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Demonstrators protest against the Keystone pipeline outside of the Canadian consulate in downtown Chicago on May 17, 2012. (NAM Y. HUH/ASSOCIATED PRESS)
Demonstrators protest against the Keystone pipeline outside of the Canadian consulate in downtown Chicago on May 17, 2012. (NAM Y. HUH/ASSOCIATED PRESS)

ENERGY

Obama’s vow on climate change signals bumpy road for Keystone Add to ...

U.S. President Barack Obama has promised to show global leadership on climate change, a vow that could have a major impact on Canada’s oil exports to its largest customer as well as this country’s own climate debate.

The Harper government is lobbying heavily to have President Obama approve the Keystone XL pipeline that would carry 830,000 barrels per day of oil-sands bitumen to the vast refining complex on the U.S. Gulf and would ease the delivery bottlenecks that have driven down Canadian crude prices.

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Opponents have mounted a well-organized, celebrity-studded campaign against the pipeline, arguing it would increase U.S. dependency on the oil sands, which they describe as the world’s dirtiest oil.

In his inaugural speech Monday, Mr. Obama highlighted climate change as a priority in his second term, though he will act without the support of Congress where the Republicans control the House of Representatives.

“We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations,” he said.

Mr. Obama did not spell out any specific plans in his speech – those will have to wait for the State of the Union address that he will make in Congress next month, and for the installation of a new slate of cabinet secretaries. He did suggest that his administration will fight for continued funding for clean-energy technology, something Republicans have criticized as a boondoggle.

At the very least, the Harper government will face political pressure to match whatever policies Mr. Obama can deliver without congressional support, which could include new energy-efficiency standards, support for renewable energy and greenhouse-gas-emissions regulations for the energy and manufacturing sectors.

Prime Minister Stephen Harper has said his government aims to move in tandem with the Americans because the two economies are so intertwined that Canada would be disadvantaged if it did not harmonize its approach with its largest trading partner.

Ottawa has moved with the United States on tougher vehicle-efficiency standards: It is promising to introduce sector-by-sector emission rules but has been slow to do so. Likewise, the Obama administration largely stalled in its first term on regulating industrial emissions, as Republicans and some more conservative Democrats argued such rules would drive up energy costs and impede the economic recovery.

There are skeptics who believe Mr. Obama will be severely limited in what he can deliver despite his rhetorical commitment.

“He is incredibly constrained in what he can do,” said Michael Cleland, an energy-policy expert with the Canada West Foundation.

On Keystone XL, opponents are urging the administration to revisit an earlier conclusion in which it stated the project would not increase overall greenhouse-gas emissions because the oil-sands crude would be produced regardless of the fate of a single pipeline project.

In November, 2011, Mr. Obama delayed a decision on the project until TransCanada Corp. could reroute it and address concerns in Nebraska about damage to a fragile ecological zone.

That rerouting work is done and the company now expects approval from Nebraska Governor Dave Heineman in the coming weeks.

But Mr. Obama’s promise of action on climate change may signal trouble for the Canadian pipeline project, particularly if he is looking for a highly visible action that does not requires backing from Congress.

“After President Obama’s inaugural remarks about climate change, Keystone XL pipeline proponents should not assume he will approve it,” said Daniel J. Weiss, director of climate strategy at Washington’s Center for American Progress.

Follow on Twitter: @smccarthy55

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