Obama's Keystone stand deepens impasse with Canada

(Reuters) With his blunt assertion that Canada could do more to cut emissions, President Barack Obama raised doubts about whether the United States will approve the Keystone XL pipeline. The question is: What exactly does Canada need to do?

As Obama seeks to revitalize his climate agenda, he has said he will evaluate TransCanada Corp's oil pipeline project on whether it will significantly raise greenhouse gas emissions.

Backers of the $5.3 billion project, which would link Alberta's oil sands to refineries on the U.S. Gulf Coast for at least 50 years, argue it would spur job growth and help the U.S. economy. It is opposed by environmentalists, including many Democrats, because the sticky oil sands must be heated with steam in order to flow, resulting in more emissions than average crude oils refined in the United States.

There is "no doubt" that Canada, as the source of the oil sands, could potentially be doing more to fight carbon emissions, Obama said in a New York Times interview late last month.

Programs to cut emissions could take a variety of paths, including investments in clean energy projects that would offset the impact of the oil sands production, or regulations that seek to make oil and gas production more efficient.

Obama's comments appeared to send the ball flying back into Canada's court, where the federal government has not tackled emissions from the oil and gas sector despite plans to do so since 2008.

But as more time passes it becomes clear that the remarks have led to an impasse between the neighbors and trading partners that could further delay a decision on the pipeline, which has already been pending for nearly five years.

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