KEYSTONE XL:

Despite divisive rhetoric, Obama's pipeline decision might not be a political game changer

Recent signals from the White House suggest President Obama could end more than four years of wrangling over the Keystone XL pipeline as early as this summer.

But while issuing permits for the project would be a consequential event, its political implications might be surprisingly few.

A decision by Obama to grant TransCanada Corp. a permit for the Alberta-to-Texas pipeline, an anticipated action given the favorable environmental review the State Department issued last week, would be guaranteed to win praise from the oil and gas industry and business interests and draw anger from environmentalists who have stridently opposed the project.

But representatives from both camps told E&E Daily in interviews this week that those responses, however intense, are likely to be short-lived before it is back to politics as usual.

"The folks that he has basically stalled well over 1,600 days now, I suspect they'll probably be pleased that they got this far," said American Energy Alliance and Institute for Energy Research President Thomas Pyle, referring to the date TransCanada first applied for the permit.

But Pyle added that approving the pipeline won't curb industry criticism of the Obama administration, including over what it sees as efforts to hold back oil and gas production on federal lands.

"I don't know that it buys him any good will," Pyle said. "There will be lots of statements of thank you ... but ultimately from a political perspective I don't know that it buys him any room to maneuver."

And ill will could linger over how much time it has taken the administration to make a final decision on the pipeline, Pyle added.

In fact, many Republicans in Congress remain wary of whether the White House will opt to reject the permit, including Rep. Lee Terry of Nebraska, who is expected to introduce a bill as soon as this week that would force approval of the 875-mile pipeline. Terry released a draft of the bill yesterday (see related story).

Sen. John Hoeven (R-N.D.) likewise has a bill ready to go, although he has said he will consult Democratic colleagues about when to introduce it (E&E Daily, March 4). The pipeline proposal was one of many topics of discussion Tuesday night, when Obama hosted a dozen Republican senators at a White House dinner (E&ENews PM, March 7).

"They've been able to somewhat create this illusion that this needed this exhaustive review process that it's gone through," Pyle said, asserting that the delay has bought Obama good will from environmentalists, one of his most loyal constituencies. "But now he's going to be under more pressure from them to deliver."

League of Conservation Voters Senior Vice President of Campaigns Navin Nayak acknowledged that permitting Keystone XL would be a blow to the organization's efforts: "It would be a huge disappointment. There's no getting around that."

But if the recent State Department environmental impact statement is any indication, the White House may be willing to rile up its environmental supporters.

Environmentalists slammed the draft assessment, which concluded the pipeline would not worsen global warming because the oil sands crude it would transport would be produced and shipped in some fashion regardless of whether the project is built.

Activists have previously argued that oil sands expansion would slow significantly if the project is rejected outright.

Environmental groups such as the Sierra Club, 350.org and the Natural Resources Defense Council have also organized public rallies against the project -- drawing thousands of protesters to the National Mall last month -- and vowing to hold the Democratic president responsible if he lets the project proceed.

"I think it would be a sock in the gut to all of the activists who worked so hard to get the president elected and to elect climate champions across the country," Michael Brune, executive director of the Sierra Club, said last month (Greenwire, Feb. 18).

But Joshua Freed, vice president of the clean energy program at the centrist Democratic think tank Third Way, said while a decision to permit the project might temporarily turn some environmentalists against the White House, it shouldn't on a long-term basis.

"I understand the passions around Keystone," Freed said, but he added, "The pipeline is a sideshow to the broader issue of addressing climate change."

Freed praised the president's efforts on the latter, including increasing fuel efficiency standards and increasing investment in renewable energy innovation, and said environmental groups should be focused on regulations governing greenhouse gas emissions from existing power plants and refineries.

"Some parts of the environmental movement have put all of their eggs, or almost all of their eggs, in the Keystone basket," Freed said, "and I think they may now find themselves with little room to maneuver except to take a strong position ... if the administration approves Keystone."

But Nayak said the LCV remains confident it can highlight other aspects of the State Department report -- arguing that the assessment's low estimates on job creation and no guarantee of energy security have been widely overlooked -- in coming months, as it seeks to block the permit.

"As much as we're not happy with how the climate impacts were ignored ... I think the other side has the burden of trying to prove that this is in the country's national interest," Nayak said.

In a memorandum earlier this month, the LCV also sought to argue that opposition to the pipeline didn't prove to be a fatal issue for congressional candidates or the president in the last election cycle, and Nayak argued that White House support for the pipeline now wouldn't change those dynamics.

"Oil companies don't spend money supporting Democrats. They spent hundreds of millions of dollars trying to defeat this president," Nayak said. "Whether this pipeline gets approved or not, those oil companies are going to spend tens of millions of dollars trying to defeat those Democrats. ... We have to keep reminding people of the reality that oil companies are in the tank, primarily for the Republican Party these days."

'Giving something to everybody'

But winning the affections, however temporary, of the oil and gas industry likely won't lend Obama any assistance for the aggressive new climate change agenda he has outlined in the first months of his second term in office.

"The relationship remains rocky. There remains mistrust on both sides. That in Washington has just been heightened by just how partisan every decision has become," Freed said. "I'm not certain that a decision to allow the pipeline to go forward will have a significant impact in improving that."

He added: "In today's polarized Washington, gratitude is always a fleeting commodity."

But the industry is prepared to hear overtures, even if it's unlikely to strike any new compromises.

"While we've had challenges with this administration, clearly this would be a helpful move to everybody involved. Not just us, but the American public," said Western Energy Alliance President Tim Wigley.

"That's been the rumor out there for a long time that there might be some quid pro quo," Wigley acknowledged, but he said there would be little industry support for executive actions on climate change policy, arguing that any policy changes should go through Congress.

Pyle echoed that sentiment but noted it would be difficult for Obama to pressure the energy industry for support when the prospect of getting any legislation through a divided Congress remains unlikely.

"I think he is positioning himself as giving something to everybody," Pyle said. "He can't really press the gas industry any more than he has because he doesn't have the ability to get anything through Congress."

But environmentalists likewise dismissed the idea of accepting a disappointment on Keystone XL if it means the administration will pursue climate change policy more aggressively on other fronts.

"The climate doesn't keep score the way pundits do in Washington," Nayak said. "We'd absolutely oppose any deal that chooses between Keystone and other climate priorities because we have to get them all right if we're serious about tackling this problem."