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Why the Keystone saga is hinting at an XL-size bargain with environmentalists

It might be all in the timing.

Much has been written already about Friday’s U.S. State Department environmental assessment on the Keystone XL. Generally speaking, the U.S. and international press seemed to think the report, which finds the pipeline would have minimal effects on greenhouse gas emissions, bodes well for TransCanada’s long-delayed project to connect the oilsands to Gulf of Mexico refineries. The Canadian media were more cautious, focusing on the fact that the report doesn’t guarantee approval by President Barack Obama and that the State Department is “anxious” for feedback on it from the public, which, naturally, includes the Keystone’s archenemies.

The most revealing thing about that report, though, might be its timing. The State’s environmental assessment is the last in a series of rapid developments that have kept the Keystone in the news since the start of Obama’s second term. First there was Nebraska Governor Dave Heineman’s letter saying the re-route of the pipeline around his state’s delicate aquifer was fine by him. Then Obama’s State of the Union speech, which sounded off alarm bells in Ottawa and Alberta by unexpectedly bringing up climate change, an issue largely ignored during the president’s electoral campaign. After that came a massive anti-Keystone rally in Washington and John Kerry’s two pointed mentions of global warming during his congressional hearing to become America’s next secretary of state and in his first public speech as such.

Nebraska’s turnaround is the only event in that sequence in which the Obama Administration might not have had a hand. Everything else happened at least partially by design (the president surely knew his State of the Union speech would have energized anti-Keystone protesters). Until Friday, Canadians would have been entirely justified in believing the balance of power at the White House had titled towards environmentalists and against the beleaguered Canuck pipeline: why else would the president and the secretary of state talk up global warming so much?

Friday’s environmental assessment, though, would seem to support another hypothesis about what the White House might have in mind: Obama will eventually approve Keystone but also try to keep the green lobby happy by giving them some kind of sizable prize (i.e. what is known as a — never so appropriately named — carrot).

A former climate adviser to President Bill Clinton recently told the Financial Times he thought President Obama should okay Keystone at the same time as he unveils some new climate initiatives. “That would allow him to put it in a broader context and to reach out to Republicans and moderates,” he told the FT.

Pragmatic environmentalists are arguing that would actually be a more desirable outcome for climate change than nixing the Keystone altogether. Here’s UC Berkeley professor Severin Borenstein on the issue:

The Keystone XL and other new oil sources create billions of dollars in economic value. Blocking them will have at best a very small impact on emissions.  But allowing them could be tied to much greater funding for alternative energy research and development.  Such work may have a shot at creating low-carbon alternatives that can compete against the bargain basement fossil fuels that will very likely result if alternative fuels start to contribute substantial supply.

Indeed, that might be exactly what the Administration had planned all along. This would explain why the president and Kerry got the Democratic green base going only to nod to Keystone supporters immediately after.

Erica Alini is a California-based reporter and a regular contributor to, where she covers the U.S. economy. Follow her on Twitter: @ealini.