Prime Minister Stephen Harper is making a last-ditch effort to sell the Keystone XL pipeline, with a letter to U.S. President Barack Obama that calls for a joint climate strategy in the oil sector.
Mr. Obama has signalled that the administration wants to see clear progress in Canada on reducing emissions from the oil sands before approving the pipeline, which is seen as a key link between Alberta and the huge refining hub on the U.S. Gulf Coast.
Sources say Mr. Harper sent a letter in late August that urged joint action to reduce emissions in the oil and gas industry, and said Canada would work with the United States to provide political cover for the controversial pipeline project.
Mr. Obama is facing staunch opposition to the long-stalled, $5.3-billion (U.S.) project from the environmental movement and the left wing of his own party, and has said he won't approve it if the pipeline leads to an increase in greenhouse-gas (GHG) emissions.
The Prime Minister's Office refused to confirm the existence of the letter on Friday, but said Mr. Harper raises the subject of Keystone XL every time he speaks to the President. The two were together at the Group of 20 meeting in St. Petersburg, Russia, this week.
Ottawa has long pushed for a bilateral strategy on climate change, and is concerned that costly new regulations on the oil and gas industry will drive investment south to the booming American sector in the absence of similar U.S. rules.
"Canada and the U.S. have integrated economies and oil and gas sectors, which underscores the importance of continuing to work together to reduce greenhouse-gas emissions," PMO spokesman Stephen Lecce said.
The Obama administration has focused its regulatory attention on the coal-fired power sector, which contributes roughly 30 per cent of U.S. emissions. The oil industry is a relatively minor source, and Mr. Obama has not indicated a plan to regulate emissions in that sector. In Canada, the oil-sands industry represents the fastest growing source of emissions.
Natural Resources Minister Joe Oliver said he was unaware of any letter. "We're continuing, of course, to up our game, and we would be very happy to work with the United States to together up our collective game," he said in a television interview Friday.
In a draft environment impact statement, the U.S. State Department concluded the Keystone XL pipeline will not in itself lead to an increase in climate-changing emissions because the oil sands will be developed with or without the pipeline.
Both proponents and opponents are now keen to see whether the State Department reiterates that finding in its final impact statement, which is due out this fall. If so, it will make it difficult for Mr. Obama to find grounds to reject the Keystone XL project, said Colin Robertson, an Ottawa-based analyst and former Canadian diplomat in Washington.
But further Canadian action on climate regulations will help Mr. Obama sell an approval to the public.
Environmental groups say Mr. Harper's intervention appears to be a desperate effort to save the project, but offers little new commitments from Canada.
TransCanada Corp. said it was unaware of the letter, but remains confident the pipeline will be approved.