02/14/2013 03:53 EST | Updated 04/16/2013 05:12 EDT

Climate change efforts on front burner in U.S. with Keystone a flashpoint

WASHINGTON - President Barack Obama's State of the Union clarion call for action on environmental issues has put climate change at centre stage in the U.S. capital — and the Keystone XL pipeline is once again playing the role of the villain.

As the Government Accountability Office added climate change to its list of “high risk” fiscal issues that threaten big costs to taxpayers, two liberal U.S. senators introduced legislation Thursday aimed at putting a price on carbon.

The bill from Bernie Sanders, an independent from Vermont, and Barbara Boxer, a California Democrat, would levy greenhouse gas emission fees on U.S. power plants and at the point of importation, meaning Alberta oilsands bitumen travelling through TransCanada's Keystone XL pipeline would be levied as it entered the United States.

The money raised — a staggering $1.2 trillion over the next decade, according to the Congressional Budget Office — would then be used to fund investments in clean energy. The bill would also provide rebates to consumers to offset any efforts by oil, coal or gas companies to raise prices.

While the legislation has dim hopes of being signed into law, since several Democratic lawmakers hail from oil- or coal-rich states, the senators are attempting to keep climate change in the national spotlight in the midst of Obama's newfound commitment to environmental issues.

The president was roundly criticized during his first term by American environmentalists who accused him of failing to push hard enough for meaningful climate change legislation.

"We have the opportunity right now, with the president’s commitment in the State of the Union, to make progress," Sanders, flanked by some of the prominent environmentalists arrested a day earlier at a White House Keystone protest, told a news conference on Capitol Hill.

"The president can and must use his authority to cut down on power plant pollution, and reject the dangerous Keystone XL project. But he cannot give up on a comprehensive legislative solution, and neither can we. We will never fully deal with this crisis until Congress passes strong legislation."

Boxer vowed the proposals would be on the Senate floor for a vote by the summer, the first time in four years that a major climate bill is poised to make it that far.

There are growing concerns among Keystone proponents in the U.S. capital that Obama may insist on something in return for approving the pipeline, including a carbon levy of the type Sanders and Boxer are proposing. That could significantly increase the costs of importing bitumen from Alberta's carbon-intensive oilsands into the United States.

But as Obama himself suggested Tuesday in his State of the Union address, Boxer has pointed out that the president might not even need Congress to act on climate change. Instead, the president can use the Environmental Protection Agency to impose new carbon regulations on existing power plants.

That's because the U.S. Supreme Court ruled the agency can and must act on greenhouse gas emissions under the country's Clean Air Act.

Those for and against Keystone are anxiously awaiting the final environmental analysis of the $7-billion project by the U.S. State Department, which will ultimately decide the pipeline's fate, since it crosses an international border. That review is expected within the next few weeks.

John Kerry, Obama's new secretary of state, said last week that he hoped a final decision on Keystone would be made in the "near term." Environmentalists have been cheered by Kerry's arrival at State since he was one of the fiercest climate hawks in Congress during his 28 years as a Massachusetts senator.

Keystone XL has become a lightning rod for U.S. environmentalists, who view it as a symbol of "dirty oil." Dozens were arrested earlier this week at yet another anti-Keystone protest outside the White House; thousands more are expected at a climate change rally on the National Mall on Sunday.

"Senators Sanders and Boxer actually understand the depth of the climate problem we face," said Bill McKibben, a leading climate change activist and key anti-Keystone organizer.

"We are awfully grateful to them for starting us down the legislative path that could reverse our disastrous course. We hope and trust that they won't have to be a lone voice."

Added Tyson Slocum, energy director of the consumer advocacy group Public Citizen: "Pricing carbon is an important tool to address climate change, and this legislation ... will protect families at the same time we seek to protect the climate.”

The carbon fee proposed by Sanders and Boxer would slash greenhouse gas emissions 20 per cent below 2005 levels by the year 2025.

Republicans have already expressed their opposition.

"It’s not just energy prices that would skyrocket from a carbon tax, the cost of nearly everything built in America would go up," Sen. David Vitter of Louisiana said in a statement.

The Government Accountability Office, meantime, urged the federal government to take action.

"Climate change poses significant financial risks to the federal government, which owns extensive infrastructure, such as defence installations; insures property through the National Flood Insurance Program; and provides emergency aid in response to natural disasters," the report states.

"GAO added this area because the federal government is not well positioned to address the fiscal exposure presented by climate change and needs a government-wide strategic approach with strong leadership to manage related risks."