Obama Links Keystone OK to Carbon Emissions

WASHINGTON (AP) -- President Barack Obama says that the proposed Keystone XL pipeline project from Canada to Texas should only be approved if it doesn't worsen carbon pollution.

The $7 billion pipeline has become a contentious issue, with Republicans touting the jobs it would create and demanding its approval and environmentalists urging the Obama administration to reject it, because it would carry oil from Canadian tar sands to the Texas Gulf Coast.

"Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation's interests," Obama said in a speech on climate change at Georgetown University. "Our national interest would be served only if this project does not significantly exacerbate the problem of carbon pollution."

While it appeared designed to reassure environmentalist fearful that the pipeline will be approved, Obama's remark could also indicate an easing of the way for the pipeline, if the carbon standard is met.

The White House has insisted the State Department is making the decision about whether TransCanada's (NYSE: TRP  ) Keystone pipeline is in the national interest, but Obama made it clear he was instructing the department to approve it only if the project won't increase overall, net emissions of greenhouse gases.

A State Department report on the pipeline earlier this year acknowledged that development of tar sands in Alberta would create greenhouse gases, but also made clear that other methods to transport the oil -- including rail, trucks and barges -- also pose a risk to the environment. For instance, a scenario that would move the oil on trains to mostly existing pipelines would release 8 percent more greenhouse gases such as carbon dioxide than Keystone XL, the State report said.

The report also said that even without the pipeline, extraction of oil from the tar sands would likely not be affected.

A top aide to House Speaker John Boehner said the remarks indicated that the pipeline should be approved.

"The standard the president set today should lead to speedy approval of the Keystone pipeline," Boehner spokesman Brendan Buck said. "Based on the lengthy review by the State Department, construction of the pipeline would not have a significant environmental impact. It's time to sign off on Keystone and put Americans to work."

Still, environmentalist took heart in Obama's remarks, noting it was the first time the administration had directly linked approval of the pipeline to its effect on pollution. The White House has previously resisted efforts by environmental groups to link the Keystone project to broader efforts curb carbon pollution from power plants.

"Today President Obama set a standard that the Keystone XL pipeline cannot harm the climate if it is to be approved. That will be difficult standard to meet," said Daniel J. Weiss, a senior fellow at the liberal-leaning Center for American Progress.

"For the first time, the president has set a do-no-climate harm standard before he approves the Keystone XL pipeline," Weiss said.

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