The State Department said Friday that the proposed Keystone pipeline would not lead to a surge in greenhouse gas emissions, a finding that brings it closer to approval but doesn't end the intense lobbying fight over the project.
A long-awaited final environmental analysis concludes that building Keystone XL would not have much effect on the rate of expansion of carbon-intensive oil sands projects in Canada.
"[A]pproval or denial of any one crude oil transport project, including the proposed project, is unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil-sands supply costs, transport costs, and supply-demand scenarios," the report states.
That's critical, because President Obama said last year that he would only approve TransCanada Corp.'s pipeline if he's convinced it won't "significantly exacerbate" carbon emissions.
But it's hardly the end. The State Department will now move into a separate, 90-day process to make a "national-interest determination" about the project, a process that will bring fresh input from other agencies.
State will also take more public comment. But there is not a deadline for a final White House decision on the project.
The report is nonetheless good news for Canadian officials, who have strongly pushed for U.S. approval, as well as major business and oil industry groups and major unions that back the project.
An array of pipeline backers welcomed the report.
"The only thing left is for President Obama to declare that this project is in our nation's interest. The potential to improve our trade relations with our top ally, Canada, while enhancing our energy security is good for all Americans," said Jack Gerard, president of the American Petroleum Institute, an oil industry lobbying group fighting for Keystone's approval.
Approval of the project is far from assured. But State's report is a blow to environmental groups battling the pipeline that would bring oil from Canadian oil sands projects to Gulf Coast refineries.
They contend that Keystone will worsen climate change by enabling faster expansion of carbon-intensive oil sands production projects.
"The State Department's environmental review of the Keystone XL pipeline is a farce. Since the beginning of the assessment, the oil industry has had a direct pipeline into the agency," said Friends of the Earth President Erich Pica.
Activists now plan to focus on swaying federal officials—and public opinion—during the "national interest determination" process.
The project is at the center of the highest-profile fight over climate change in recent years, and it presents thorny problems for President Obama and Secretary of State John Kerry, who has made global warming a major focus during his long political career.
Obama faces colliding pressures from Canada, a key international ally, and the environmental movement that's part of his political base.
Support for the pipeline from a number of big unions, another key Democratic constituency, adds to the dueling pressures.
In a sign of the political sensitivity of Keystone XL, the State Department on Friday sought to carefully stage-manage the report's release.
The department held a morning phone briefing for a small group of reporters, with the information under embargo until the study's release.