Bloomberg News

Obama Gives No Ground on Keystone After Meeting With Harper

February 20, 2014

President Barack Obama gave no ground on the Keystone XL pipeline after meeting with Canadian Prime Minister Stephen Harper, who is pressuring the U.S. to get construction approved.

TransCanada Corp. (TRP)’s Keystone project loomed large at yesterday’s summit among Obama, Harper and Mexican President Enrique Pena Nieto. The U.S. and Canada are at loggerheads over the $5.4 billion collaboration, which is under review by U.S. agencies.

“Keystone will proceed along the path that already has been set forth,” Obama said at a joint news conference in Toluca, Mexico. He said he recognized that Harper views the review as “a little too laborious.”

After public remarks and a private meeting with Obama, Harper said his views in favor of the project “are well known.”

Harper said the U.S. and Canada share similar goals on limiting greenhouse gases. He said a U.S. State Department report “was pretty definitive” that the pipeline won’t significantly add to carbon emissions.

The summit’s agenda on trade and economic growth was overshadowed by the violence in Ukraine, which Obama and PrimeHarper decried, and by a state court decision in the U.S. that may further delay approval of the Keystone pipeline.

National Interest

Obama has said the pipeline, which is designed to carry oil south from the oil sands of Alberta to American refineries along the Gulf Coast of Texas and Louisiana, would only be in the U.S. national interest if it doesn’t add to emissions that scientists say are at the heart of climate change.

The U.S. president said in Mexico that he and Harper discussed “a shared interest in dealing with greenhouse gas emissions. This is something we have to deal with.”

In its final environmental review, the U.S. State Department on Jan. 31 found the pipeline wouldn’t greatly increase carbon emissions because the oil sands in Alberta will be developed anyway. The process now moves into a second stage, focused on whether the project is in the U.S. national interest.

Republicans in Congress also are putting pressure on Obama to approve the pipeline, which is opposed by environmental groups that have supported the Democratic president in the past.

Political Concerns

“I think on the merits the president sees no reason why it shouldn’t happen, but the environmental wing of the party is very strong, and he doesn’t want to disappoint them,” said James R. Jones, a former U.S. ambassador to Mexico who also was a Democratic Representative from Oklahoma.

“The delay is probably to let a case be made as thoroughly as possible that this the right thing to do before he makes a decision,” he said in a telephone interview..

Possibly adding to another hangup in the process, a judge in Nebraska ruled yesterday that the governor’s approval of the pipeline’s route through the state was illegal.

Judge Stephanie Stacy in Lincoln, the state’s capital, struck down legislation that shifted the power to approve the pipeline route to Governor Dave Heineman, a Republican, from the state’s Public Service Commission.

An area of clear agreement in Toluca was trade. This year’s installment of the summit known as the “Three Amigos” meeting marked the 20th anniversary of the North American Free Trade Agreement.

Canada is the largest trading partner with the U.S. while Mexico is third, after China. Obama, Harper and Pena Nieto said they are aligned on expanding free trade through the Trans-Pacific Partnership with countries including Japan and Malaysia.

Pena Nieto said the accord “can expand the potential of North America into the Asia-Pacific region.”

Obama said the three North American neighbors “can present a united front against a number of other participants in the TPP negotiations who don’t have as much of a tradition of free trade.”

Obama said opposition from some of his fellow Democrats in Congress won’t derail negotiations or hold up ratification if an agreement is reached.

“We’ll get this passed, if it’s a good agreement,” he said.

To contact the reporters on this story: Angela Greiling Keane in Toluca, Mexico, at agreilingkea@bloomberg.net; Eric Martin in Toluca, Mexico, at emartin21@bloomberg.net; Andrew Mayeda in Toluca, Mexico, at amayeda@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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