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Obama’s legacy stands in Keystone’s path

There is plenty of talk this week about the legacies of two prominent Americans.

One of them, the Denver Broncos' veteran quarterback Peyton Manning, is a master at passing the ball. The other, President Barack Obama, has spent the past few years punting when faced with a decision about an oil pipeline.

Mr. Manning bristles at the idea of concentrating on legacy as he prepares for Sunday's National Football League championship against the Seattle Seahawks, saying that he's not about to retire from the game yet.

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Mr. Obama, by all accounts, wants to be remembered as the leader who won important battles in the fight against climate change. The problem for the president as he looks toward the end of his last term is that TransCanada Corp.'s Keystone XL pipeline from Canada has become as much – if not more – a symbol of the environmental cause as it is a major environmental risk.

For Mr. Obama, a decision on Keystone XL is 3-D chess, involving political strategy ahead of this year's mid-term elections and keeping the hearts and minds of environmentally and socially focused Democratic voters for 2016, as well as making continued strides on energy independence and promoting job creation.

"The president wants to make sure his legacy on climate is solid," a former administration official told Reuters before the president's State of the Union speech on Tuesday. "The degree to which this decision impacts the way he's viewed by the progressive community, that's certainly something they need to weigh."

Mr. Obama steered well clear of Keystone XL in his address, mentioning instead the country's decreasing reliance on imported oil, its potential for expanded use of natural gas and a move to tougher rules on carbon emissions from power plants.

Meanwhile, Republicans are weighing another in a series of legislative gambits to force a decision on Keystone. That could lead Mr. Obama into another kicking situation, as was the case two years ago when TransCanada's initial application was rejected rather than approved on an imposed fast track.

There is speculation that the U.S. State Department could issue its final environmental impact report as early as this week, kicking off a 90-day period for deciding on a presidential permit that would allow the $5.3-billion (U.S.) pipeline to be built to southern Nebraska from Alberta. Here are a couple things to keep in mind as both sides of the debate crank up their messaging.

First, and anti-Keystone forces probably don't like to hear it, but Canada's oil sands are the origin of increasing volumes of crude in the United States, even as overall imports shrink to levels not seen in decades. Incremental pipeline expansions on systems run by Enbridge Inc. and TransCanada Corp., as well as increasing oil-by-rail capacity, have made it easier to move the stuff to far-off U.S. refineries that want it, and the logjam will clear up more as this year wears on.

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New stats from the National Energy Board show Canadian oil exports averaged 2.4 million barrels a day in 2013, with most of it going to the U.S. That's up by a third in the five years since TransCanada first filed to build Keystone XL. It shows that with or without the pipeline, the oil gets produced and shipped, backing up one of the key assessments in the draft version of the State Department's environmental report.

Second, and the Alberta and federal governments probably don't like to hear it, but by delaying tougher restrictions on carbon from the industry, they've done themselves no favours. Sure, Canadian oil patch leaders do not want to act unilaterally ahead of the U.S. on emission targets since they argue it would harm their competitiveness. But Mr. Obama has framed clearly what he will base his decision on – whether the project will mean increased carbon pollution.

Canada and its oil industry can keep arguing that its current record on that front is ample proof for the president to approve a pipeline, even as overall emissions keep climbing. But it may not be enough for a leader struggling through a tough political season and seeking to establish an environmental legacy.

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