WASHINGTON — The State Department released a report on Friday concluding that the Keystone XL pipeline would not substantially worsen carbon pollution, leaving an opening for President Obama to approve the politically divisive project.
The department’s long-awaited environmental impact statement appears to indicate that the project could pass the criteria Mr. Obama set forth in a speech last summer when he said he would approve the 1,700-mile pipeline if it would not “significantly exacerbate” the problem of greenhouse gas emissions. Although the pipeline would carry 830,000 barrels of oil a day from Canada to the Gulf Coast, the report appears to indicate that if it were not built, carbon-heavy oil would still be extracted at the same rate from pristine Alberta forest and transported to refineries by rail instead.
“He’ll deliberate and take the time he needs,” said Kerri-Ann Jones, the assistant secretary of state for oceans and international affairs.The report sets up a difficult decision for Secretary of State John Kerry, who now must make a recommendation on the international project to Mr. Obama. Mr. Kerry, who hopes to make action on climate change a key part of his legacy, has never publicly offered his personal views on the pipeline. Aides said Mr. Kerry was preparing to “dive into” the 11-volume report and would give high priority to the issue of global warming in making the decision. His aides offered no timetable.
Environmentalists said they were dismayed at some of the report’s conclusions and disputed its objectivity, but they also said it offered Mr. Obama reasons to reject the pipeline. They said they planned to intensify efforts to try to influence Mr. Kerry’s decision. For more than two years, environmentalists have protested the project and been arrested in demonstrations against it around the country. But many Republicans and oil industry executives, who support the pipeline because they say it creates jobs and increases supplies from a friendly source of oil, embraced the findings.
The State Department is expected to shortly release the results of an inspector general’s investigation into the preparation of an earlier draft of the environmental impact report. The investigation was ordered after an environmental group obtained documents indicating that some consultants for the firm that wrote the draft report had previously done work for TransCanada, the company seeking to build the pipeline. If investigators determine a conflict of interest in the preparation of that draft, the State Department may have to conduct a new environmental review.
In light of the investigation, environmentalists were particularly critical of the report released on Friday.
“In what could be perceived as eagerness to please the oil industry and Canadian government, the State Department is issuing this report amidst an ongoing investigation into conflicts of interest, and lying, by its contractor,” said Erich Pica, the president of Friends of the Earth.
Some environmentalists saw reason for optimism in the review, which models several possible future oil market possibilities. Most involve a future of high oil prices and robust demand, in which the oil sands crude is rapidly developed with or without the Keystone pipeline. However, the report offers one alternative sequence, in which oil prices and demand are low. In that case, not building the pipeline might slow development, and thus slow carbon emissions. That possibility is unlikely, but it could provide the administration something to point to should it deny the project.
“We’re taking the inclusion of that scenario as good news,” said Susan Casey-Lefkowitz, director of international programs at the Natural Resources Defense Council.
The oil industry applauded the review.
“After five years and five environmental reviews, time and time again the Department of State analysis has shown that the pipeline is safe for the environment,” said Cindy Schild, the senior manager of refining and oil sands programs at the American Petroleum Institute, which lobbies for the oil industry.
There are political and strategic advantages to approving the pipeline: It would strengthen relations with Canada and provide a conduit for oil from a friendly neighbor. If the pipeline is approved this year, it could also help the re-election campaigns of two vulnerable Democratic senators from oil-rich states — Mary L. Landrieu of Louisiana and Mark Begich of Alaska — while silencing critics who for years have urged the president to move ahead with the pipeline.
Environmentalists said that if Mr. Obama were to approve the pipeline, it would destroy his efforts to make progress on climate change. Thomas F. Steyer, a California hedge fund billionaire and a major donor to Mr. Obama’s presidential campaigns, has started an advocacy group, NextGen Climate Action, that has spent heavily campaigning against the pipeline.
Larry Schweiger, the president of the National Wildlife Federation, said: “This is a large source of carbon that’s going to be unleashed. We’re headed in a terribly wrong direction with this project, and I don’t see how that large increase in carbon is going to be offset.”
Although the pipeline is a potent political symbol, its true impact on both the environment and the economy would be more limited than either its supporters or its opponents suggest.
The new State Department report concludes that the process used for producing the oil — by extracting what are called tar sands or oil sands from the Alberta forest — creates about 17 percent more greenhouse gas emissions than traditional oil. But the report concludes that this heavily polluting oil will still be brought to market. Energy companies are already moving the oil out of Canada by rail.
“At the end of the day, there’s a consensus among most energy experts that the oil will get shipped to market no matter what,” said Robert McNally, an energy consultant who was a senior energy and economic adviser to President George W. Bush. “It’s less important than I think it was perceived to be a year ago, both politically and on oil markets.”
The new State Department analysis took into account the growing global demand for oil and the rapidly growing practice of moving oil by rail in areas where pipelines have not been built. “Given the anticipated outlook of oil prices and the cost of development, no single project will likely affect the rate of extraction,” said a senior State Department official, who asked not to be named under the ground rules imposed by the department.
But moving oil by rail has its own hazards. As the practice has increased in recent years, so have incidents of explosions of rail cars carrying oil.
Supporters of the pipeline say it will create jobs, though the number may be limited. A study by the Cornell Global Labor Instituteconcluded that the pipeline would create about 3,900 construction jobs over two years.
Privately, people close to Mr. Obama say that although he is committed to building a climate legacy, he does not see the pipeline as a central part of that effort. Instead, the president is moving forward with a set of Environmental Protection Agency regulations on coal-fired power plants, the nation’s largest source of greenhouse gas emissions.
Those regulations do not have the potent political symbolism of the pipeline, but could have a far greater impact on the nation’s greenhouse gas emissions by freezing construction of new coal plants and closing hundreds of existing ones.
Ahead of making his decision, Mr. Kerry will take counsel from the leaders of eight other government agencies: the Departments of Defense, Justice, Interior, Commerce, Transportation, Energy and Homeland Security and the E.P.A. It is unclear when the decision might be made, but some close to the process say it could take as long as a year.
Environmentalists are preparing to influence the next stages of the decision-making process.
“This is the most scrutinized pipeline in the nation’s history,” said Brigham A. McCown, a former administrator of the Pipeline and Hazardous Materials Safety Administration. “The fact that it’s lasted as long as it has means one of two things. They’ve either done a very good, thorough job, or they’ve slowed it down due to political pressure.”
Correction: January 31, 2014
An earlier version of this article misidentified the agency with which Susan Casey-Lefkowitz is affiliated. It is the Natural Resources Defense Council, not the Natural Resources Defense Center.
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