Prime Minister Justin Trudeau says he’s “disappointed” U.S. President Barack Obama has rejected TransCanada’s application to build the Keystone XL oilsands pipeline, a decision that marks the Liberal leader’s first test in office juggling Canada-U.S. relations and the tricky energy and environment file.
The Obama administration’s decision Friday to kill the pipeline project – in part over concerns about “dirtier crude oil” from Canada – throws the spotlight on the new Liberal government and how it will balance energy development and environmental protection leading into an international climate change summit in Paris at the end of the month.
“We are disappointed by the decision but respect the right of the United States to make the decision,” Trudeau said in a statement.
“The Canada-U.S. relationship is much bigger than any one project and I look forward to a fresh start with President Obama to strengthen our remarkable ties in a spirit of friendship and co-operation.”
Speaking at the White House, Obama said the Keystone pipeline “would not serve the national interests of the United States” and that the project played an “over-inflated role” in the political discourse between Canada and the U.S.
Trudeau has supported the Keystone XL pipeline to get Canadian crude to international markets. However, he had also cautioned that until Canada found a way to responsibly and effectively price carbon, the Americans would delay and eventually decline the pipeline.
“We know that Canadians want a government that they can trust to protect the environment and grow the economy,” Trudeau said Friday in his statement.
“The Government of Canada will work hand-in-hand with provinces, territories and like-minded countries to combat climate change, adapt to its impacts, and create the clean jobs of tomorrow.”
The project has become an environmental lightning rod in both Canada and the United States over energy security and the environmental impacts of carbon-intensive oilsands production.
Obama said Trudeau was disappointed by the U.S. government’s decision but accepted that it’s theirs to make.
“While he expressed his disappointment, given Canada’s position on this issue, we both agreed that our close friendship on a whole range of issues – including energy and climate change – should provide the basis for even closer co-ordination between our countries going forward,” Obama said at the White House after meeting with U.S. Secretary of State John Kerry.
“And in the coming weeks senior members of my team will be engaging with theirs in order to help deepen that cooperation.”
The White House’s decision ends, for now, a seven-year saga over a 1,900-kilometre pipeline that would have shipped 800,000 barrels of oilsands crude a day from Alberta to the U.S. Gulf Coast.
The pipeline would run through Montana, South Dakota and Nebraska, before connecting with existing pipelines to carry the crude to refineries along the Texas Gulf Coast.
Obama said his administration rejected the pipeline for multiple reasons, including: it would not make a meaningful long-term contribution to the American economy; would not lower gasoline prices; and that “shipping dirtier crude oil into our country would not increase America’s energy security.
“This pipeline would neither be a silver bullet for the economy, as was promised by some, nor the express lane to climate disaster proclaimed by others,” the president said.
In a statement, Kerry took a harsher tone, saying the pipeline “would facilitate the transportation to the United States of one of the dirtiest sources of fuel on the planet.”
Kerry said he spoke with Foreign Affairs Minister Stéphane Dion to explain his decision.
“As Secretary of State, I fully recognize the importance of this project to Canada, one of our closest strategic allies and energy trading partners. We consulted with our Canadian friends and I spoke with Foreign Minister Dion today regarding this decision,” Kerry said in the statement.
“While we understand the impact of this decision on Canada, I am confident that our close and long-standing relationship with Canada will continue to grow stronger in the years ahead.”
Russ Girling, CEO of Calgary-based TransCanada, said the company is disappointed by Obama’s decision and still believes the pipeline is in the best interests of Canada and the United States.
The project would create thousands of jobs, billions in economic benefits and be safer than transporting oil by rail.
“Today, misplaced symbolism was chosen over merit and science – rhetoric won out over reason,” Girling said. “Today’s decision deals a damaging blow to jobs, the economy and the environment on both sides of the border.
But Simon Dyer, Alberta director at the Pembina Institute, an environmental think-tank, said Obama’s decision should come as no surprise and further reinforces Canada need to establish federal greenhouse gas regulations for oil and gas development.
He also noted the Liberal party promised during the election campaign to modernize the National Energy Board’s review process, including having upstream carbon emissions included in environmental assessments for energy projects like pipelines.
“Addressing climate impacts is the new normal for major energy infrastructure projects,” Dyer said.
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