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President Barack Obama gestures during a speech on climate change, June 25, 2013, at Georgetown University in Washington. Obama is proposing sweeping steps to limit heat-trapping pollution from coal-fired power plants and to boost renewable energy production on federal property.

Evan Vucci/The Associated Press

U.S. President Barack Obama has laid out a sweeping plan to fight climate change that would limit pollution from coal-fired plants, a package he unveiled while making it clear that approval for Canada's Keystone XL pipeline project will only come if its backers can prove it won't worsen global warming.

Saying that the world still looks to the United States to lead, Mr. Obama called for curbs on existing and new coal-fired plants – the sector produces two-fifths of the country's electricity but is a major source of emissions – and pledged billions of dollars in new funds for clean energy projects and coastal defences that would give the U.S. a greater capacity to deal with the threat of extreme weather.

"As a president, as a father and as an American, I'm here to say we need to act," Mr. Obama told a sweltering crowd at Georgetown University. "I refuse to condemn your generation and future generations to a planet that's beyond fixing."

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Mr. Obama has made the fight against climate change a centrepiece of his second term, raising the issue in his inaugural address of January and again in his State of the Union speech in February. Now, the President is laying out the steps his administration will take to address rising carbon levels in the Earth's atmosphere.

About halfway through his speech on Tuesday, Mr. Obama set out the test he will use to decide the fate of the Keystone XL project, the Canadian pipeline intended to funnel Alberta crude to Texas refineries, saying it will be approved "only if this project does not significantly exacerbate" greenhouse-gas emissions.

The U.S. President said the Keystone pipeline's impact on the climate will be "absolutely critical to deciding whether this project goes forward" – a different metric from the Canadian government's insistence that the project should proceed because it creates jobs and contributes to American energy security.

In a draft environmental impact report released in March, the State Department concluded the Keystone pipeline would have a minor impact on greenhouse-gas emissions from the oil sands because producers will find a way to get the crude to market with or without the project.

But the U.S. Environmental Protection Agency in April challenged the State Department's conclusion that the oil-sands producers would find new markets – with or without the pipeline – and that therefore the specific Keystone XL project would not contribute to oil sands' expansion and greater emissions of greenhouse gases.

No decision is expected on the project, which would send upwards of one million barrels a day of Alberta oil-sands crude to vast refineries on the Texas and Louisiana Gulf coast, until later this year.

Tuesday was the first time Mr. Obama had directly referred to Keystone XL in months. He used the language of the project's critics, calling it a "tar sands" pipeline even though proponents prefer the term "oil sands," a description they feel is more accurate and less pejorative.

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The Canadian government seized on the test Mr. Obama set out, suggesting that Keystone could easily pass it. Natural Resources Minister Joe Oliver called a news conference to suggest the U.S. government's own studies are on Canada's side.

"We agree with President Obama's State Department Report in 2013 which found that, 'approval or denial of the proposed project is unlikely to have a substantial impact on the rate of development in the oil sands, or on the amount of heavy crude oil refined in the Gulf Coast area,'" Mr. Oliver said.

He declined to say which way he felt the White House was leaning, saying he does "not take it as a given" that the project will be approved. He noted the "pipeline has been the most studied pipeline in the history of the world." But he did not criticize Mr. Obama's use of the phrase "tar sands," saying only Ottawa does not use the term because "there is no tar in the oil sands" – and adding that "not everyone understands that."

The Washington Post reported that the Obama administration will examine whether vetoing the project – in which case the oil would likely be shipped by rail – would translate into higher emissions than approving its construction.

Saskatchewan Premier Brad Wall said in an interview that he's heartened by the fact Mr. Obama made mention of Keystone, since a failure to do so would spur speculation the President was backing away from approval. "I think there's some source for optimism."

Alberta International and Intergovernmental Affairs Minister Cal Dallas issued a statement after Mr. Obama's speech that sought the reassure the United States his province cares about fighting climate change.

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In a statement, TransCanada Corp., the Canadian company proposing the Keystone XL pipeline, said it is "pleased" by the bar the President had set for Keystone XL, and that the five-year review of the project has already repeatedly satisfied those criteria are satisfied.

Anti-pipeline activists, who cheered the President's sweeping promises on climate change, had a different read of Mr. Obama's comments on Keystone. Billionaire anti-Keystone campaigner Tom Steyer called it the "Keystone death knell" because Mr. Obama had made clear "he would put the economic and health interests of America before the financial interests of a foreign oil company."

If, as opponents want, total emissions are measured that include development that could be spurred by Keystone funnelling upwards of one million barrels a day to world markets and thus ending the steep discount Alberta's heavy crude currently suffers, Mr. Obama's criteria might be tough to meet.

"The president made it emphatic: he won't green-light a tar sands pipeline that means more carbon pollution, more climate chaos, more drought, heat, fire and floods," said Susan Casey-Lefkowitz, director of the international program with the Natural Resources Defense Council.

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