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Demonstrators stand in front of the White House in Washington during a rally in support of President Barack Obama's pledge to veto any legislation approving the Keystone XL pipeline.

Jose Luis Magana/AP

The U.S. Environmental Protection Agency has handed new ammunition to President Barack Obama in his battle against Congress over the proposed Keystone XL pipeline from Canada.

In a letter released Tuesday, the EPA disputed a key contention made by pipeline supporters – including the Harper government – that approving the project would have no impact on greenhouse gas emissions. Mr. Obama has said he would not approve the long-delayed pipeline if it would result in significant new amounts of carbon dioxide being sent into the atmosphere, though the Republican-led Congress is attempting to take the decision out of his hands and force the project's approval.

The environmental agency cited a State Department study from last year that found that oil sands production emits more GHGs per barrel than other sources of crude.

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"Until ongoing efforts to reduce greenhouse gas emissions associated with the production of oil sands are more successful and widespread, [the State Department report] makes clear that, compared to reference crudes, development of oil sands crude represents a significant increase in greenhouse gas emissions," EPA assistant administrator Cynthia Giles said in the letter.

However, Alberta Premier Jim Prentice said that the EPA does not oppose the project and that his province's environmental record was not being raised as a concern by American lawmakers in his visit to Washington this week to lobby for the pipeline.

"Alberta's environmental performance is first in class. If there is a producer of oil somewhere in the world that has better and higher environmental standards than Alberta, I don't know who it is," said Mr. Prentice. "The issue in Washington today is not Alberta's environmental performance."

The EPA's letter was sent to the State Department, whose consultants concluded last year that the decision on TransCanada Corp.'s pipeline would not affect climate emissions because the Canadian crude would get to market whether that specific project proceeded or not, largely because of an increase in rail transportation. But the EPA challenged that view, saying it was based on projections of high oil prices.

With the steep decline in crude prices since last June, oil sands companies are facing much tougher economic conditions. In the absence of a pipeline, the additional expense of transporting crude by rail would reduce production in the oil sands, and by extension, greenhouse gas emissions. The approval of the pipeline, therefore, would increase production and emissions, Ms. Giles said.

The administration must now determine whether approving the pipeline is in the U.S. national interest, taking into account environmental, economic and energy security matters. Mr. Obama has criticized many of the claims made by pipeline supporters, and echoed the objections raised by environmental activists.

TransCanada has waged a six-year effort to win presidential approval for the Keystone XL pipeline, which would carry 830,000 barrels a day of mostly oil sands crude from Alberta to the massive refining hub on the U.S. Gulf Coast. Prime Minister Stephen Harper famously called its approval a "no-brainer" but Mr. Obama delayed the decision, provoking conflict with Ottawa and a pitched political battle with the Republican-led Congress.

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Mr. Prentice reiterated that oil sands growth does not depend on the Keystone XL pipeline and that the project remains viable, despite any swings in the price of oil.

U.S. environmental groups were delighted by the EPA's letter. "Now we're in a world where the administration's top environmental analysts have concluded that Keystone XL does have significant environmental impact, particularly on climate," said Anthony Swift, of the Natural Resources Defense Council in Washington.

With a report from Paul Koring in Washington

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