In a highly anticipated speech on his second-term climate objectives, Obama weighed in on Keystone despite reports he would steer clear of the controversial project because it's in the midst of a State Department review.
"Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation's interest," said Obama, frequently mopping his brow at D.C.'s Georgetown University on a steamy summer's day.
"And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline's impact on our climate will be absolutely critical to determining whether this project is allowed to go forward."
Keystone XL has become a flashpoint for U.S. environmentalists, who have branded it a symbol of "dirty oil" and have spent the past two years pitching a fierce public relations battle against the project. The pipeline would transport millions of barrels of oilsands bitumen a week from Alberta to Texas refineries.
The Canadian government, meantime, has been pouring millions into lobbying efforts in the U.S. capital in recent months. TransCanada CEO Russ Girling said recently that he's confident Keystone XL will ultimately win approval.
The State Department's draft environmental report on the pipeline, released in March, suggested its impact on greenhouse gas emissions would be minimal given oilsands bitumen would find its way to market with or without Keystone XL. But the powerful Environmental Protection Agency later disputed that finding.
TransCanada is pleased with the president's remarks because "the almost five-year review of the project has already repeatedly found that these criteria are satisfied," Girling said in a statement released Tuesday.
"These reviews have found that, from a global perspective, the decision whether to build the proposed project would be unlikely to substantially affect the rate of extraction or combustion of Canadian oilsands crude and its global impact."
The alternatives would be worse, Girling said: "The oil will move to market by truck, rail and tanker, which will significantly add to global greenhouse gas emissions."
Joe Oliver, Canada's natural resources minister, cited the State Department report in saying that the U.S. already has evidence that Keystone XL won't have an impact on emissions levels.
"That's what the U.S. State Department itself had concluded, in a 3,500-page report which was the second major independent comprehensive study that they had done on this subject," Oliver said in Toronto.
"This pipeline has been the most studied pipeline in the history of the world."
TransCanada officials have long held that even if Alberta oilsands production doubled, the carbon emissions would be "immaterial" to global greenhouse gas levels. They say Canada accounts for only two per cent of global greenhouse gas emissions, and the oilsands make up only five per cent of that total.
In the wake of Obama's remarks, the question now arises: Who will determine whether the pipeline would result in increased greenhouse gas emissions?
"I guess it will be Obama, based on which arguments he considers most persuasive," Danny Harvey, a climate change expert at the University of Toronto, said in an interview.
Harvey added that TransCanada will likely argue that in a shorter time frame — while it's having trouble getting its product to market via pipelines in Canada and the U.S. — the impact on greenhouse gas emissions would be a drop in the bucket.
"But anything that adds to the supply of oil and reduces the pressure to improve fuel efficiency and slow the development of alternatives to oil will increase emissions. So on those grounds, Keystone will increase emissions and so, by the president's own criterion, should be disapproved," he said.
New Democrat MP Megan Leslie said that while Obama's position on Keystone is now substantially more pronounced, it's still unclear how a final decision will be made if it's to be based on Keystone's impact on greenhouse gas emissions.
"How will that be determined? Who will be determining it? I think we're still in a little bit of a wait-and-see," she said.
Obama rejected the pipeline in early 2012, but invited TransCanada to file a new application with an altered route that would skirt Nebraska’s ecologically sensitive Sand Hills region. TransCanada did so, earning the thumb's up from the state of Nebraska.
A final State Department decision on the $7.6-billion project is expected this fall. After that, it will be up to Obama to bless or block Keystone XL.
The president's Keystone comments came as he provided details of new U.S. climate change regulations that will cut carbon emissions at power plants and require federal projects to better prepare for the sort of extreme weather that left much of Calgary underwater in the past week.
He'll use his executive authority to implement most of the proposals, bypassing congressional lawmakers reluctant to move on climate change.
Obama is directing the EPA, for example, to initiate regulations on carbon emissions from existing coal and gas-fired utilities by next June, and to kick-start similar rules on new power plants.
It could all force Canada's hand on its own domestic energy policies.
As Oliver pointed out on Tuesday, both Canada and the U.S. have pledged to reduce emissions by 17 per cent below 2005 levels by 2020. To meet those targets, Canada will have to introduce its own regulations to curb emissions from the oil and gas industry.
The Conservative government has been promising those regulations for seven years. Environment Minister Peter Kent said earlier this year that they'd be introduced by this summer, but there's still no sign of them.
Obama, meantime, will ask the Interior Department to issue permits for new wind, solar, and other renewable energy projects on public lands in efforts that could fuel more than six million American homes within seven years. New energy-efficiency projects are also a big part of his plans, presenting possibly opportunities for Canadian biofuel companies.
The president is also calling for more forceful action in boosting efficiency for appliances such as refrigerators and lamps. He's also instructing federal agencies to help state and local governments with existing problems caused by climate change, including improved flood protection for roads and other infrastructure, better hospitals to respond to deadly storms, and drought relief.
Obama's new plan, with its major focus on reducing carbon emissions at coal plants, caused coal stocks in the U.S. to drop shortly after the market opened. Coal producers and some electric utilities have warned that Obama's proposals will mean higher energy costs for consumers.
Mitch McConnell, the Senate minority leader, said Obama's plan is a "war on coal" that means a "war on jobs."
"It's tantamount to kicking the ladder out from beneath the feet of many Americans struggling in today's economy," McConnell said in a statement.
Environmentalists on both sides of the border, meantime, cheered Obama's climate change plan, and especially his assertions on Keystone XL.
"President Obama denied the ‘deniers’ and inspired Americans and people around the world to address the most urgent crisis of our day: climate change," said John Bennett, executive director of Sierra Club Canada.
"The reference to the Keystone XL pipeline doesn’t bode well for pipeline proponents. Stating approval could only happen if it didn't lead to an increase in greenhouse gas emissions is clearly a death sentence for Keystone — it's an impossible task."
Keystone proponents, on the other hand, urged the president to "look at the facts."
"In fact, if Keystone XL isn’t built, global greenhouse gas emissions are likely to increase because more oilsands crude would be refined in countries like China, where current emissions standards allow three times more sulphur dioxide than in the United States," said a statement from the group known as Oil Sands Fact Check.
"Canada accounts for only two per cent of global greenhouse gas emissions and emissions from oilsands are a small fraction of that."