Obama's Keystone XL decision will set tone for 2nd term

U.S. President Barack Obama put off a decision during this year's election campaign, but now that he's won a second term, his next move on the proposed Keystone XL oil pipeline may signal how he'll deal with environmental and energy issues in the years ahead.

Protests against oil pipeline intensify as support appears to be gaining in U.S. Congress

U.S. President Barack Obama, seen speaking in front of TransCanada pipes that have yet to be installed in Cushing, Okla., successfully put off a decision about the Keystone XL pipeline extension until after the recent U.S. elections. But pressure is mounting for his administration to deliver its final verdict.

It's a decision U.S. President Barack Obama put off during this year's election campaign, but now that he's won a second term, his next move on the proposed oil pipeline between Alberta and Texas may signal how he will deal with climate and energy issues in the four years ahead.

Obama is facing increasing pressure to determine the fate of the $7-billion Keystone XL project, with environmental activists and oil producers each holding out hope that the president, freed from the political constraints of re-election, will side with them on this and countless other related issues down the road.

On its surface, it's a choice between promises of jobs and environmental concerns. But it's also become a proxy for a broader fight over U.S. energy consumption and climate change.

"The broader climate movement is absolutely looking at this administration's Keystone XL decision as a really significant decision to signal that dirty fuels are not acceptable in the U.S.," said Danielle Droitsch, a senior attorney with the Natural Resources Defense Council.

Once content with delays that have kept Calgary-based TransCanada Corp.'s proposed pipeline from moving forward at full speed, opponents of Keystone XL have launched protests in recent weeks at the White House and in Texas urging Obama to kill the project outright. On Capitol Hill, support for the pipeline appears to be gaining.

But Obama has shown little urgency about the pipeline, which would carry Alberta's oilsands crude nearly 2,700 kilometres from Hardisty, Alta., to refineries on Texas's Gulf Coast. The pipeline requires U.S. State Department approval because it crosses an international boundary.

The pipeline became an issue in the campaign, and Obama put it on hold while a plan was worked out to avoid routing it through Nebraska's environmentally sensitive Sandhills region.

TransCanada revised the route, but that caused the lengthy environmental review process to start over. In the meantime, the company split the project into two parts, starting construction in August on a southern segment between Oklahoma and Texas even as it waits for approval for the northern segment that crosses the Canadian border.

Although the lower leg didn't require Obama's sign-off, he gave it his blessing in March anyway, irking environmental activists who see the pipeline as a slap to efforts to reduce oil consumption and fend off climate change.

"At a time when we are desperately trying to bend the emissions curve downwards, it is wrong to open up a new source of energy that is more carbon intensive and makes the problem worse," wrote former U.S. vice-President Al Gore, now a Nobel Prize-winning climate activist, in an email.

New capacity not needed, report found

The pipeline's proponents are touting access to affordable energy to try to find bipartisan appeal on the issue.

"It's just a no-brainer," Senator Mary Landrieu, a Louisiana Democrat, said. "Canada is going to export this oil. It's either going to come to the U.S. or it's going to go to Russia or China. Even Democrats that aren't really excited about oil and gas development generally can figure that out."

Protesters including U.S. actress Daryl Hannah, centre, denounce the planned Keystone XL pipeline outside the White House in August 2011. (Saul Loeb/AFP/Getty)

But critics point out that there's abiding questions about how much of the oil piped to the U.S. would actually remain there. Oil companies' own plans show they intend to export much of the refined products to Asia and Europe.

And it's been hotly debated whether the increased oil-carrying capacity from the pipeline is even needed. A report commissioned by the U.S. government itself rebuts the idea, saying that there is already enough pipeline capacity to the U.S. to deliver petroleum from Western Canada until at least 2030.

The messy politics may demonstrate why Obama punted the decision until after the election. Now both sides are applying pressure with renewed vigour.

A TransCanada spokesman said the company expects a decision by the State Department, which is determining whether the pipeline is in the national interest, in the first quarter of 2013, and hopes to start construction on the upper portion shortly thereafter. The longer the decision drags on, the less realistic that timeline appears to be.

Officials in Nebraska are close to completing their own study of the revised route, with a public hearing planned for Tuesday ahead of a final decision by Gov. Dave Heineman.

With files from CBC News