The Environmental Protection Agency on Tuesday said the collapse in oil prices has cast doubt on the State Department's conclusion that building the Keystone XL oil-sands pipeline would not cause a big boost in greenhouse-gas emissions.
EPA's comments, in a Feb. 2 letter to State made public today, are an important twist in the battle over Keystone, because President Obama has said he will not approve the pipeline if it would "significantly exacerbate the problem of carbon pollution."
The letter arrives as Congress, despite a veto threat, is preparing to send a bill to President Obama's desk next week that mandates federal approval of TransCanada's $8 billion project. The State Department's six-year review of Keystone is ongoing.
A State Department analysis last year concluded that not building the proposed pipeline would have little effect on climate change because carbon-intensive oil-sands development would grow with or without Keystone. Oil-sands companies could increase the use of railways to move their growing production to market, even though it's more costly, State noted.
However, State's study also included what the authors called an unlikely scenario: a major, sustained price drop could indeed curtail the growth of oil-sands development without Keystone, at least if other major pipeline projects don't go forward, either.