Keystone pipeline's impact on global warming should be reviewed: EPA

The U.S. Environmental Protection Agency has urged the State Department to "revisit" how much the Keystone XL oil pipeline would contribute to global warming, saying oilsands crude produces 17 per cent more emissions than "average" crude oil.

In a supplemental environmental impact statement released Tuesday, the EPA suggests that the falling price of oil, now at about $52 US a barrel, should change the assessment of Keystone’s environmental impact.

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The agency said that if the pipeline, which would ship crude oil from Canada's oilsands to refineries along the Texas Gulf Coast, was not approved, it would be less likely that oilsands crude would find a market.

At oil prices in the $65 to $75 US a barrel range, "construction of the pipeline is projected to change the economics of oilsands development and result in increased oilsands production and the accompanying greenhouse gas emissions," the EPA said in a statement.

The EPA has just reconfirmed what has been clear all along: the Keystone XL pipeline fails the president's climate test- Michael Brune, Sierra Club

A January 2014 environmental analysis by the State Department had concluded that the oilsands would be developed regardless of whether the pipeline was built.

"Given the recent variability in oil prices, it is important to revisit these conclusions," wrote Cynthia Giles, assistant administrator of EPA's enforcement office.

The comments come as the U.S. House of Representatives prepares to vote next week on the Keystone pipeline, following its approval in the Senate last week.

The bill approving the pipeline would then land on President Barack Obama's desk. He has said he is likely to veto the bill.

Ammunition for Obama

The EPA may just have handed the president the evidence he needs to nix Keystone XL over climate change concerns.

The agency estimates that the pipeline would result in an additional 27. 4 million tonnes of carbon dioxide equivalents released into the air annually, equal to the emissions of 7.8 coal-fired plants.

Obama has said all along that he would wait for the review process to conclude, and that the pipeline could not exacerbate global warming.

Environmental groups welcomed the EPA's statement today.

"The EPA has just reconfirmed what has been clear all along: the Keystone XL [oilsands] pipeline fails the president’s climate test," said Michael Brune, executive director of the Sierra Club. "These comments make it clear that this dirty and dangerous project would significantly increase carbon pollution. That's the standard the president has set for rejecting Keystone XL, so we fully expect him to do just that."

The EPA's comments also leave open the possibility that the State Department could do additional analysis, delaying the project's review again.

TransCanada's reaction

TransCanada Pipeline, the Calgary-based company proposing to build the $8-billion Keystone XL pipeline, has waited seven years for a U.S. decision.

In a statement released Tuesday, TransCanada spokesman Shawn Howard pointed out that oil was at $40 US a barrel when the project was first proposed, suggesting it was not helpful to base criticism of the pipeline on today's oil prices.

"Our customers are guided by a long-term view because they will pay for a significant part of the cost of building infrastructure like Keystone XL, regardless of the commodity price," he said.

Howard also pointed out that Keystone would carry light oil from the Bakken shale to the U.S. Gulf Coast.

He argued that the U.S. has already increased its reliance on oil from Canada and is currently shipping it by rail, a method the EPA admits causes significant amounts of greenhouse gas emissions.

Howard dismissed the EPA's analysis of the GHG impact of Keystone.

"By focusing on the emissions related to an energy resource that is developed outside of the United States, the EPA is ignoring the fundamental sovereignty of another country and the significant steps that Canada and Alberta have already taken to reduce emissions," he said.

A State Department spokeswoman said the views of all agencies would be considered in the review process