02/03/2015 02:17 EST | Updated 04/05/2015 05:59 EDT

Keystone XL Pipeline Could Result In Higher Emissions After All, EPA Says

WASHINGTON - Canada's ambassador to the U.S. likes to joke that he walks around Washington carrying a copy of the State Department report on the Keystone XL pipeline tucked in his jacket pocket.

That's how critical that document has been to the pipeline cause. Proponents from ambassador Gary Doer, to members of the Harper cabinet, industry players, and pro-oil lawmakers have repeatedly quoted it as a talking point.

Its basic conclusion became their mantra: Canadian oil production is destined to keep growing, so might as well build a pipeline, which is safer and cleaner than shipping by rail.

That document, however, is now being punctured by bursts of friendly fire.

President Barack Obama routinely ignores the report's finding that oil from the pipeline would likely be used in the U.S. Obama has taken to deriding the project as an export route through America, not to America.

An even more fundamental finding of the report is now being challenged from within the Obama administration. The Environmental Protection Agency has questioned the likelihood of oilsands expansion. It suggests the existing analysis is out of date, because the price of oil has plunged since the State Department issued its report last year.

"It is important to revisit these conclusions," says an EPA letter sent this week to the State Department and released Wednesday.

"Given recent large declines in oil prices and the uncertainty of oil price projections, the additional low price scenario included in the (State report) should be given additional weight during decision making, due to the potential implications of lower oil prices on project impacts, especially greenhouse gas emissions."

The State Department's report had concluded that the Canadian oilsands would keep growing at a similar pace, unless the long-term oil price fell under the $65-$75 range and no other pipelines get built.

One year later, oil is at $50 a barrel and no other pipelines have yet been built.

The State Department is now in the final stages of preparing its long-awaited, oft-delayed review of the project, and is gathering input from other agencies including the EPA.

It will soon make a recommendation to the president, and he'll make the final call.

At the same time, there are plans within Congress to force Obama's hand with legislation. So far, Obama has signalled he intends to veto bills that would circumvent his authority on cross-border infrastructure.

Obama has said his decision will be guided by climate change — and whether or not the project would increase greenhouse gases.

In its letter this week, the EPA compares the carbon emissions from the pipeline's maximum capacity of 830,000 barrels per day to 5.7 million new passenger vehicles on the road.

Environmental groups celebrated the letter's release Wednesday.

"The president's got every nail he needs to finally close the coffin on this boondoggle," said Bill McKibben, head of anti-pipeline group

In its response, pipeline company TransCanada Corp. said Canadian oil exports had gone up over the years, its carbon emissions per barrel had gone down, and it noted that oil sent through the pipeline to U.S. refineries would displace crude from Venezuela — which in some cases produces higher greenhouse gases.

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