Harper offers Obama climate plan to win Keystone approval

Prime Minister Stephen Harper has sent a letter to U.S. President Barack Obama formally proposing "joint action to reduce greenhouse gas emissions in the oil and gas sector," if that is what's needed to gain approval of the Keystone XL pipeline, CBC News has learned.

Sources say PM willing to accept emissions reduction targets proposed by the U.S.

Prime Minister Stephen Harper, who talked with U.S. President Barack Obama during the G8 Summit in June and again at this week's G20 Summit in St. Petersburg, Russia, has proposed a North American strategy on climate change in a bid to gain approval for the Keystone XL pipeline, CBC News has learned. (Adrian Wyld/Canadian Press)

Prime Minister Stephen Harper has sent a letter to U.S. President Barack Obama formally proposing "joint action to reduce greenhouse gas emissions in the oil and gas sector," if that is what's needed to gain approval of the Keystone XL pipeline through America's heartland, CBC News has learned.

Sources told CBC News the prime minister is willing to accept targets proposed by the United States for reducing the climate-changing emissions and is prepared to work in concert with Obama to provide whatever political cover he needs to approve the project.

The letter, sent in late August, is a clear signal Canada is prepared to make concessions to get the presidential permit for TransCanada Corp.'s controversial $7-billion pipeline, which will connect the Alberta oilsands to refineries in Texas.

But there's a huge snag. Obama hasn't said what he wants, or needs, to assuage environmentalists that Keystone XL is in America's national interest, or to convince congressional Democrats facing re-election next year that it can be approved without sabotaging their campaigns.

And the White House has yet to respond to the letter.

Harper and Obama met on the sidelines of the G20 Summit in St. Petersburg, Russia, on Friday, but the president's pre-occupation with Syria sidelined the Keystone issue, which is what the prime minister really wanted to discuss.

Canada has been waging a concerted lobbying effort and advertising campaign in the United States for some time, but it appears to have had little impact. Those efforts intensified this summer, when the president spoke publicly about the project.

"Our national interest will be served," Obama said in June, "only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline's impact on our climate will be absolutely critical to determining whether this project is allowed to go forward."

Not long after, the president told the New York Times that proponents of the pipeline, including his Republican opponents, are overstating the jobs it will create.

Which way is Obama leaning?

Environmentalists were thrilled. Trade unions not so much. But these days it appears the environmental lobby wields more clout on the file in Washington. Keystone XL opponents are the ones who demonstrated outside the White House last fall. They're the ones who moved most quickly after Obama's statement, trumpeting the not-unreasonable interpretation that the president is finally prepared to live up to his promise to champion climate change in his second term.

And they stepped up their campaign against Keystone XL, arguing that stopping the pipeline is critical to keeping what they call the world's dirtiest oil in the ground.

Canadian proponents weren't exactly thrilled, either, though the official response at the time was more muted.

Natural Resources Minister Joe Oliver insisted the project is in the national interests of both countries. He argued Americans will need the millions of barrels of oilsands bitumen that would be shipped from Alberta to Texas refineries each week.

Other Canadian officials were quick to note that this country has done as much, or more, to curb emissions than the U.S. They say coal-fired electricity plants south of the border produce something like 32 times the amount of greenhouse gases as the oilsands, and argue the massive Keystone project will not significantly add to emissions.

What Harper can do

For Harper, Keystone is the biggest, but not the only, pipeline project needed to carry Alberta's oilsands crude to world markets. Where his government can act, it has: streamlining the federal environmental review process for major energy projects, cultivating new markets in Asia and approving more foreign investment in Canada's energy sector.

He and Obama initiated the Clean Energy Dialogue in 2009, committing the two countries to working together to reduce the impact of climate change. Canada and the U.S. have already adopted the same regulations to reduce car and truck emissions.

But, for all that, approval of Keystone XL remains a huge hurdle, especially for Harper.

The prime minister treats politics as a game of chess, every move thought out in advance as part of a strategy to checkmate his opponents. Obama's plays are unorthodox and unpredictable, making it hard to anticipate, let alone counter, his moves.

For all of Harper's speeches about Canada's emergence as an energy superpower, for all the time he has played up the proximity and security offered by Canada's energy reserves, the oilsands approval process drags on. A decision by the president, once expected soon after the 2012 election, might not be made until 2014.

Meanwhile, the U.S. government insists oilsands crude is far more carbon-intensive than other oil used by Americans.

And the president's own position on the project remains ambiguous, to say the least.

Canadian officials had hoped that Friday's quick chat at the G20 summit would be a chance to flesh some of that out, or at the very least, to hear something more tangible than the hints dropped by David Jacobson, the former U.S. ambassador to Canada, who told Canadian reporters before he left the job that the White House would like to see more progress in Canada to reduce emissions.

"Give us a hard target," one source told CBC. "Don't make us guess."

So the Harper government grimly plays on.

Millions are being spent on the "Go with Canada" ad campaign that pops up on major U.S. websites, reminding Americans that Canada and the U.S. adopted the same greenhouse gas reduction targets at Copenhagen, that Canada is a friend and ally and that, together, the two countries can achieve energy independence.

Canadian oil companies are looking at shipping bitumen by truck, rail and tanker.

And the review process south of the border drags on.

Regulations twice delayed

In the meantime, work continues to move Canada closer to its target to reduce emissions by 17 per cent below 2005 levels by 2020, a target critics in this country argue can't be met even without further development of the oilsands.

Canada has been promising to bring in regulations for the energy sector for years, but missed deadlines set by the former environment minister, Peter Kent, the first one for the end of 2012, the other this past summer. There's no indication now, with a new environment minister, when those regulations will be ready.

Alberta is proposing what's known as 40/40 solution: a 40 per cent reduction in greenhouse gases produced for each unit of oil produced, and a $40-a-tonne charge on any emissions above that regulated level.

Industry says it's too much. Environmentalists say it isn't enough.

And south of the border, the environmental movement continues its drumbeat. A report released this week by the Sierra Club and others, titled FAIL: How the Keystone XL Tar Sands Pipeline Flunks the Climate Test, concluded, once again, that the best thing to avoid climate armageddon is to say no to the pipeline, and leave the oilsands in the ground.