Keystone Defended by Alberta Premier as Carbon Questioned

Alberta’s premier defended her province’s environmental record while lobbying in Washington yesterday for the Keystone XL pipeline amid new questions over Canada’s ability to meet greenhouse-gas reduction targets.

Alison Redford, making her fifth trip to promote the $5.3 billion project that would connect the oil sands in her Canadian province to refineries on the Gulf Coast, met with officials at the U.S. Environmental Protection Agency, the White House’s Council on Environmental Quality and the State Department.

The State Department is overseeing an environmental review to estimate the extent Keystone would contribute to global warming, which has become the central issue in the more than five-year effort by TransCanada Corp. (TRP) to get approval to build the pipeline.

“It’s been a really robust discussion,” Redford told reporters after meeting with Senator Mary Landrieu, a Louisiana Democrat who supports the project. “We just want to make sure that as this evolves, which has to happen, that the right information is on the table and the perspective of Alberta is on the table.”

The tie-in between oil sands development and global warming surfaced again last month amid reports that Canada will have difficulty in meeting its obligation made at a 2009 United Nations summit to cut greenhouse gases by 17 percent by 2020 from 2005 levels.

Greenhouse Emissions

Environment Canada, the country’s environmental regulator, said in its annual report last month that greenhouse gas emissions would reach 734 million metric tons in 2020, an increase over the 720 million metric ton estimate it gave in a 2012 emissions report. Emissions would have to be cut to 612 million metric tons by 2020 to meet the UN commitment.

By comparison, the U.S. EPA has said the heavy crude that Keystone could carry over its 50 years projected life span may lead the release of 935 million metric tons of carbon dioxide, according to a letter the agency sent to the State Department.

President Barack Obama said in a June speech at Georgetown University that the pipeline shouldn’t be approved if it would “significantly exacerbate” carbon pollution.

The EPA, in commenting on a draft environmental impact statement released in March, said the State Department should conduct a fuller analysis of Keystone’s climate impact in its final report.

“It is a challenge for us,” Redford said. “In order to deal with that issue, there is not a silver bullet solution. A silver bullet solution is not to stop production in the oil sands.”

Climate Change

Redford later told reporters in Canada on a conference call that she wasn’t asked about Canada’s rising greenhouse gas emissions in her meetings with the State Department or EPA. Oil-sands projects are Canada’s fastest-growing source of emissions, according to the Environment Canada report.

Keystone has galvanized environmental groups that argue it will worsen climate change risks by promoting development of the oil sands. The process of producing and refining the type of heavy crude produced there releases more greenhouse gases than the “life cycle” emissions of more conventional oil.

Supporters argue that the oil sands will be developed with or without Keystone and that the fuel shipped to refiners in the U.S. will displace another type of heavy crude produced in Venezuela with a similar carbon footprint to the bitumen mined in Alberta’s oil sands.

Environmental Analysis

Both sides are awaiting the release of the State Department’s environmental review. The department then will conduct a 90-day study to judge whether the pipeline is in the national interest. Federal agencies have another 15 days to appeal the finding to Obama.

Redford said State Department officials didn’t indicate when the environmental analysis would be completed.

She told the Canadian Broadcasting Corp. earlier this month that the province wouldn’t raise its levy on emissions unless the U.S. acts on the issue.

Alberta charges C$15 ($14.30) per metric ton on emitters that don’t meet the current target of reducing greenhouse gas emissions per unit of economic growth by 12 percent.

“We want to make sure that all of our industry is competitive,” Redford said. She said there needs to be a “continental conversation” about further greenhouse gas cuts.

Environmental groups say Keystone should be rejected on its own merits, regardless of any joint agreement on carbon emissions.

“It’s like extracting a promise to stop smoking in exchange for a pack of cigarettes,” said Anthony Swift, an attorney with the Natural Resources Defense Council.

Regular Meetings

The State Department meets regularly with parties interested in the Keystone project, including landowners in its path, environmental groups and officials from TransCanada.

Redford met yesterday with EPA Deputy Administrator Bob Perciasepe, Council on Environmental Quality Chair Nancy Sutley, and Assistant Secretary of State Kerri-Ann Jones. It was the third time Redford met with Jones since 2011, according to the State Department.

Redford was also scheduled to meet with Democratic Senator Heidi Heitkamp of North Dakota, a supporter of the project.

TransCanada, based in Calgary, first applied to build Keystone more than five years ago. The proposal unleashed a lobbying war over energy development and environmental protection that’s drawn in the oil industry, environmental groups and the Canadian government, which looks to Keystone as an economic development tool.

Obama rejected the initial application in January 2012, citing environmental concerns of officials in Nebraska.

TransCanada then altered the route. The environmental analysis now being written is evaluating that new pathway.

A draft analysis released in March found that Keystone wouldn’t have a big impact on greenhouse gas emissions because companies would find other means of transporting the diluted bitumen to market, through other pipelines and by train.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

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

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