A major U.S. government agency has thrown up a new political roadblock for a $12-billion TransCanada Pipelines (TSX:TCA.PR.X) project by questioning the need for a new pipeline to carry bitumen from Alberta’s oilsands to American refineries.
Documents released by the U.S. Environmental Protection Agency harshly criticize a draft environmental impact statement for the Keystone XL project. They say the assessment doesn’t consider how importing more oilsands oil would affect U.S. climate change policies. Nor does the review examine how renewable energy and fuel-efficient vehicles could reduce the need for such oil.
“The draft . . . does not provide the scope or detail of analysis necessary to fully inform decision-makers and the public,” says a letter to officials at the U.S. State Department, which conducted the impact assessment.
The agency gave the State Department’s assessment its lowest possible rating of “inadequate.”
It’s the third potential setback to the Keystone XL project, which would pump bitumen from Alberta’s oilsands 2,700 kilometres south to refineries on the U.S. Gulf coast.
Earlier in July, Rep. Henry Waxman, who chairs the House of Representatives Energy and Commerce Committee, wrote a letter to Secretary of State Hillary Clinton making several of the same points made by the agency. Last month, a group of 50 other House members signed a letter to Clinton with similar concerns.
The agency draws an explicit link between the project and greenhouse gas emissions.
“There is a reasonably close causal relationship between issuing a cross-border permit for the Keystone XL project and increased extraction of oilsands crude in Canada intended to supply that pipeline,” the letter reads.
Because refining fuel from bitumen creates more greenhouse gases than conventional crude, the agency calculates that building and filling the pipeline to capacity would lead to the emission of 27 million more tonnes of carbon dioxide a year. That’s the equivalent of seven coal-fired power plants.
“We believe the national security implications of expanding the nation’s long-term commitment to a relatively high carbon source of oil should . . . be considered.”
As well, the agency also says the State Department ignored impacts that renewable energy and increasingly fuel-efficient vehicles are likely to have on U.S. demand for oil.
“We recommend that this discussion be expanded to include consideration of proposed and potential future changes to fuel economy standards and the potential for more widespread use of fuel-efficient technologies, advanced biofuels and electric vehicles,” the letter says.
“This would help ensure that the need for the project is clearly demonstrated.”
In an email, TransCanada spokesman Terry Cunha says the company disagrees with the agency’s assessment.
“We believe the Department of State did a thorough and complete job in preparing the draft environmental impact statement and we look forward to the environmental review process continuing,” he writes.
“Keystone XL does not drive oilsands development. It is not appropriate for Department of State to review greenhouse gas impacts.”
Environmentalists, however, say the letter echoes their position.
“A lot of what we’ve asked is encompassed here,” Tony Iallornardo from the National Wildlife Federation in Washington, D.C., said Wednesday. “It’s something that we’ve argued all along.”
The Alberta government, including Premier Ed Stelmach and Energy Minister Ron Liepert, have defended the Keystone XL project in the past against similar objections. Provincial officials were studying the agency’s letter and were not immediately available for comment.
Under U.S. law, the State Department — which regulates cross-border pipelines — is obliged to respond to all public and government comments in its final environmental impact statement. If those responses are inadequate, the protection agency has warned the department that it could take its concerns to the White House Council on Environmental Quality for mediation.
If the two bodies can’t reach a settlement, the final decision would be bumped further up the executive branch and could ultimately reach the president.
Iallornardo said coming up with a compromise for the final environmental impact statement is likely to delay Keystone XL for months.
“This is the first real setback for what has largely been a fast track from the State Department.”