Obama rejects Keystone XL, saying pipeline wouldn’t create many jobs, lower gas prices or boost U.S. energy security

WASHINGTON — President Barack Obama on Friday rejected Keystone XL, ending a long-running debate over the proposed pipeline that would transport heavy Canadian crude to America’s heartland.

Obama’s announcement followed the State Department’s conclusion that TransCanada Corp.’s $8 billion border-crossing project is not in the “national interest.”

“The pipeline would not make a meaningful long-term contribution to our economy,” Obama said, adding that Keystone XL would not have created many jobs, lowered gasoline prices or boosted U.S. energy security.

The Keystone rejection is seen as anchoring Obama’s environmental legacy and providing a much more visible symbol of his commitment to a green agenda than previous moves to throttle greenhouse gas emissions from power plants and clamp down on methane released from oil and gas infrastructure nationwide.

In the seven years since TransCanada first sought a presidential permit for Keystone XL, the proposed pipeline has become a litmus test in broader fights over fossil fuels and climate change.

Obama said the extreme views about Keystone XL’s significance were inaccurate. “This pipeline would neither be a silver bullet for the economy, as was promised by some, nor the express lane to climate disaster proclaimed by others,” Obama said.

In recent days, Obama has come under intense pressure from Democratic leaders and prominent environmentalists to formally reject the project before international climate negotiations in Paris.

Read more: Keystone XL rejection could give a boost to international climate negotiations

Obama said the Keystone decision was important ahead of the summit to reinforce the United States’ global leadership and commitment to combating climate change.

“Approving this project would have undercut that global leadership,” Obama said. “If we want to protect the worst effects of climate change before it’s too late, the time to act is now.”

Keystone XL, designed to span 1,179 miles and cross three states on its way to Steele City, Neb., would give the bitumen extracted in Alberta a cheaper route to the United States.

Because the hydrocarbon is typically extracted through open-pit mining and energy-intensive steam-assisted techniques, environmentalists say it produces more carbon dioxide emissions over its entire life cycle, from production to eventual combustion.

But Keystone XL supporters say the project would support American jobs and provide a reliable supply of heavy North American crude to Gulf Coast refineries.

The rejection could force TransCanada to formally write off Keystone XL, which has cost the Calgary-based company $2.4 billion already. TransCanada has already built a 487-mile-long leg of Keystone that runs from Cushing, Okla., to Nederland, Texas. And the company is continuing construction on a 48-mile pipeline that will extend its existing Keystone pipeline system to refineries in Houston, Texas. That project is expected to begin operations next year.

TransCanada CEO Russ Girling said the company was “disappointed” with the president’s decision, adding that “misplaced symbolism was chosen over merit and science.”

“Today’s decision deals a damaging blow to jobs, the economy and the environment on both sides of the border,” Girling said.

TransCanada did not outline its next steps. The company could reapply after Obama leaves office, in hopes that a new president would have a more favorable view of the project. Republican presidential candidates have uniformly backed Keystone XL, while Democrats Hillary Clinton and Bernie Sanders oppose it.

But it is not clear whether the company will continue pursuing Keystone XL. A crude price slump has diminished much of the enthusiasm for new oil sands development in Alberta and the clamor for new pipelines to transport it. TransCanada also is forging ahead with its proposed Energy East pipeline that would ferry oil sands crude to Canada’s east coast.

Existing producers are using other pipelines and rail to send bitumen to Gulf Coast refineries that are configured to handle the heavy crude.

Environmentalists celebrating the decision Friday insisted the Keystone XL rejection would curb future development of the Canadian oil sands and encourage other world leaders to halt fossil fuel projects because of their potential climate change impacts.

“President Obama’s decision to reject Keystone XL because of its impact on the climate is nothing short of historic — and sets an important precedent that should send shockwaves through the fossil fuel industry,” said 350.org executive director May Boeve.

The decision also could embolden environmentalists who have made Keystone XL the centerpiece of their fight against fossil fuels.

Keystone’s champions in the oil industry and in Congress blasted Obama’s move.

Michael Whatley, vice president of the industry-backed Consumer Energy Alliance, said Obama had “thumbed his nose at more than two thirds of Americans who support reducing energy imports from unfriendly nations, who support job creation, who support friendly relations with our Canadian neighbors, who support regulatory decisions based on science — not politics — and who support big ideas and big achievements.”

Sen. John Hoeven, R-N.D., accused the administration of “making a political decision.”

“The Keystone XL pipeline is about more than a single pipeline,” he said. “In the bigger picture, it’s about building the kind of energy plan and infrastructure we need to make America stronger and more secure, now and in the future.”

Rep. Gene Green, D-Houston, said that “for too long our energy infrastructure been held up by unreasonable demands.”

“Pipelines are the safest, most environmentally sound way of moving oil and gas,” Green said. “While some groups don’t believe we should use these resources, the reality is these resources are the drivers of our economy.”

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