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Demonstrators carry a pipeline replica during a march against the Keystone XL pipeline in Washington, February 17, 2013.RICHARD CLEMENT/Reuters

TransCanada Corp.'s proposed Keystone XL pipeline has cleared a significant political hurdle in the United States after a State Department assessment concluded the project would not contribute to the warming of the planet.

Assistant Secretary of State Kerri-Ann Jones cautioned that the department's report, released late Friday, does not provide a recommendation on the project. But activists who oppose the pipeline condemned the work as a "botch job" that unduly minimizes the environmental impacts, while proponents welcomed its conclusions.

It will take several more months and much politically charged debated before U.S. President Barack Obama decides whether to approve the $7.6-billion pipeline – after he has considered its impact on employment, energy security and the environment.

The Harper government – along with Alberta and Saskatchewan – has been lobbying heavily for approval of the pipeline, which would transport 830,000 barrels a day of bitumen from Alberta to the major refining hub on the U.S. Gulf Coast. Lack of market access has driven down Canadian crude prices and blown a gaping hole in Alberta government finances.

Supporters of the pipeline have been increasingly worried about its fate since Mr. Obama made dramatic promises in his inaugural address in January to tackle climate change. Mr. Obama delayed the project 15 months ago over concerns that its path crossed a fragile ecosystem in Nebraska. It has since been re-routed.

In the draft environmental impact statement, the State Department concluded that TransCanada Corp.'s pipeline project will not, of itself, have a major impact on development in the oil sands and, therefore, on global emissions of greenhouse gases.

The conclusion undercuts a key concern of the project's vocal critics, who insist the approval of the pipeline would be a major setback for Mr. Obama's climate policy. But the State Department concluded that oil-sands producers will eventually find new routes to markets, including the growing use of rail cars to transport crude around North America. As a result, the project would have little direct impact on global greenhouse-gas emissions.

"We find the approval or denial of any one crude-oil transport project, including the proposed project, remains unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy oil in the United States," Ms. Jones said in a conference call.

However, she said the State Department wants to get more input during the 45-day comment period on whether the construction of the pipeline would indeed stimulate more production and emissions from the oil sands.

Natural Resources Minister Joe Oliver greeted the environmental report with caution, saying the government must "respect the process," which could tick on for another four months.

"This report is not a political judgment," he told reporters in Toronto. The minister will travel to the United States next week to voice Ottawa's eagerness to get the project approved.

"The integration of our two economies and energy systems contributes to our shared prosperity, energy security and environmental stewardship," he said, pointing out the tens of thousands of jobs that the pipeline will purportedly create on both sides of the border.

Alberta Premier Alison Redford welcomed the findings.

"From our perspective, it was important because it showed that a decision not to proceed with this pipeline would not have the desired outcome that some environmental NGOs think that it might," she said.

TransCanada CEO Russ Girling said the State Department has buttressed the case for more oil imports from Canada.

"This report again confirms the fact that the U.S. is going to continue to import oil for decades into the future," he said. "This isn't an issue of alternative energy versus fossil fuels. This is really just a question of where do you want to get your oil from, given that you're going to need it."

The assessment raised concerns for pipeline supporters. It noted that oil-sands bitumen is a particularly carbon-intensive source of crude and added that, because of booming U.S. domestic supply, the Canadian oil is not as desperately needed as it was even 18 months ago.

Environmentalists slammed the conclusion that the Keystone XL pipeline would not result in more production from the oil sands and, hence, more greenhouse-gas emissions. They noted that oil-industry executives themselves have underscored the project's importance.

"They call it Keystone for a reason," said Bill McKibben, co-founder of and an organizer of large protests in Washington and civil disobedience campaigns against the pipeline.

"If they don't have it, they're not going to be able to expand the tar sands the way that they've been planning to. And to pretend otherwise … it's actually pretty astonishing."

With reports from Nathan Vanderklippe in Calgary, Josh Wingrove in Edmonton and Josh O'Kane in Toronto

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