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TransCanada Rebuffs EPA’s Call for Keystone Clean Energy

The U.S. Environmental Protection Agency says TransCanada Corp. (TRP) should be required to buy renewable power to run pumps along the route of its proposed Keystone XL pipeline, a measure the company said is unworkable and unnecessary.

In a July 17 letter to the U.S. State Department, the Calgary-based company said the EPA suggested it buy renewable energy to run pumping stations from Alberta to Steele City, Nebraska. The EPA, in an April filing with the State Department, also said the U.S. should work with Canada to promote technology to capture and store underground the carbon-dioxide emissions generated in the production of Canadian oil.

The State Department is reviewing the $5.3 billion project because it crosses an international border. TransCanada first applied for a permit for the project in 2008.

“Keystone does not control the source of the power it purchases,” according to the letter, released yesterday by the company. “TransCanada has invested over $5 billion in emission-less energy sources including the largest wind farm in Maine and 13 hydro power stations in the U.S. Northeast.”

The EPA said the pipeline will increase global warming emissions because developing crude from western Canada’s oil sands produces more carbon dioxide than the typical oil used in the U.S. In addition to the impact on climate change, environmental groups oppose the project because of the potential for oil spills along its more than 875-mile (1,408-kilometer) route.

Revised Path

President Barack Obama in 2012 rejected the original route proposed by TransCanada after officials in Nebraska said it endangered a sensitive wetland. The company has since proposed a new pathway that extends further east in the state to avoid the area.

A draft environmental analysis prepared for the State Department said Keystone wouldn’t raise the risks of climate change because Alberta’s oil would probably be developed with or without the pipeline. If both Keystone and the other proposed pipelines from the oil sands aren’t built, the reduction in annual emissions would be at most 5.3 million metric tons a year of carbon dioxide, less than 0.1 percent of total U.S. emissions, the department’s analysis found.

In a speech in Washington last month on the risks of climate change,Obama said his administration would reject Keystone if it finds that the project would “significantly exacerbate the problem of carbon pollution.”

TransCanada Chief Executive Officer Russ Girling said the project would not increase greenhouse gas emissions.

Canada, Venezuela

“I think it’s clear that the Keystone pipeline has no impact on GHG emissions,” Girling said yesterday in an interview at the New York headquarters of Bloomberg News. “What we’re really talking about is Canadian oil versus Venezuelan oil and what is the net difference between the two, and it’s zero.”

The carbon-dioxide emissions tied to the pipeline would have “an unmeasurable impact on climate,” according to TransCanada’s letter.

The EPA is one of eight government agencies reviewing the project under the direction of the State Department. Girling said he hopes for a final decision later this year. The EPA asked the State Department to conduct a fuller market analysis in its final report, which may be released as early as September.

Nayyera Haq, a State Department spokesman, didn’t respond to a request for comment.

Keystone Review

Once the environmental assessment is completed, the department will have 90 days to review whether Keystone is in the U.S. national interest.

Environmental groups like 350.org and the Sierra Club welcomed Obama’s speech as a sign that the administration would reject the project. They contend by encouraging development of the oil sands, which release more greenhouse gases than the drilling and processing of more conventional crude, Keystone does pose an extra risk to climate.

Heather Zichal, a White House energy and climate-change adviser, said Obama “raised the bar” concerning the importance of carbon-dioxide emissions in the Keystone decision with his speech, which also laid out actions the administration would take to lower greenhouse gases.

Ultimately, the State Department will decide whether the project is in the national interest, Zichal said yesterday at a conference sponsored by Politico, a Washington-based publication.

“The decision on one pipeline will not impact the oil sands achieving its ultimate potential as a global supplier,” said Kristine Delkus, senior vice president for pipelines law and regulatory affairs at TransCanada, in the letter to the State Department.

To contact the reporters on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net; Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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