Bloomberg: Trade Keystone XL for Climate Deal

Former NYC mayor says oil-sands pipeline can be leverage for bigger cuts from Canada

Michael Bloomberg at a press conference at City Hall on September 24, 2013. (National Journal)

Most environmentalists say construction of the Keystone XL pipeline would be "game over" for the climate, but former New York City Mayor Michael Bloomberg says there's an upside—if President Obama can trade it for a climate deal with Canada.

Bloomberg, in his first official statement on the pipeline, wrote an op-ed suggesting that the contentious oil-sands pipeline can be a major chip in talks with Canada. Used correctly, he said, the pipeline can even result in a deal along the lines of the monumental U.S.-China deal that "far more than offsets the potential impact of the pipeline."

"Here in the U.S., Republicans in Congress could declare economic victory, while Democrats could declare environmental victory," wrote Bloomberg, now a special envoy to the United Nations on cities and climate change. "The president could declare both, while also burnishing his foreign policy legacy and building momentum for the conference in Paris."

As countries prepare for United Nations negotiations this year, Canada is facing international pressure to clean up its reliance on fossil fuels. Prime Minister Stephen Harper has been reticent to address climate change, saying he doesn't want to put the country's robust oil and gas industry at risk for an international deal.

President Obama on Tuesday vetoed a bill that would have approved the Alberta-to-Gulf Coast pipeline, and the State Department is still considering the pipeline's permit. Obama hasn't indicated how he'll weigh in on the final review, but he has said he won't approve it if it significantly contributes to climate change.

Bloomberg's position on the pipeline could put him at odds with some high-profile environmentalists, who have almost uniformly come out against the project. Bloomberg has strong climate credentials from his work with billionaire Tom Steyer and former Treasury Secretary Harold Paulson on the risks climate change poses to businesses, and through his United Nations work. But Steyer has been adamantly opposed to construction of the pipeline and has used his NextGen Climate PAC to fight it.

The idea of trading Keystone for a climate deal isn't necessarily a new one. Canadian press reported in 2013 that Harper had reached out to Obama to propose "joint action to reduce greenhouse-gas emissions in the oil and gas sector" if the president would approve the pipeline. Ultimately, nothing came of the offer.

Paul Bledsoe, a former energy aide to President Clinton, said such a deal could make waves if Canada agreed to work on clean technology such as carbon capture as it develops the tar sands, especially since the country appears intent on developing them regardless of whether Keystone is built.

"The crux of the matter still remains if the pipeline will determine significant development of the oil sands or not," said Bledsoe, now a senior fellow at the German Marshall Fund. "If it's not, then negotiating for a broader climate benefit is logical."

Carbon-capture technology was a centerpiece of the U.S.-China deal, in which China also agreed to cap its emissions by 2030 and increase its share of renewable power. Bloomberg wrote that a Canadian deal—paired with the work on China—would provide a lift for the U.S. in global talks.

"Canada and China are the U.S.'s two largest trading partners. Reaching climate agreements with both would be no small feather in his cap," Bloomberg wrote. "And the flight to Ottawa is a lot shorter."