Critics of Keystone oil pipeline warn it will 'profit China'

Critics and supporters of a controversial 2,000km US-Canada oil pipeline have stepped up their campaigns in the past week as the US State Department seeks public comments on the proposal and Republicans consider pegging the project's approval to new debt ceiling talks.

This time around though, especially for environmental groups opposed to the pipeline, there is a new angle to the debate: Building the TransCanada Keystone XL pipeline will give a leg up to China.

Billionaire activist Tom Steyer, a long-time opponent of the pipeline, sponsored a TV advertisement carrying this message that was aired just before United States President Barack Obama's State of the Union address two weeks ago.

The ad features images of Canadian Prime Minister Stephen Harper shaking hands with former Chinese premier Wen Jiabao and argues that significant Chinese interests in the Canadian oil industry would mean that oil transported through America's heartland in the pipeline would ultimately end up being shipped to China.

"Keystone means more profit for investors like China, more power for their economy and more carbon pollution for the world," says a narrator over images of Chinese cities.

"They (the Chinese) are counting on the US to approve TransCanada's pipeline to ship oil through America's heartland and out to foreign countries like theirs."

The argument is meant to undercut an important pillar of the pro-pipeline lobby's case - that the pipeline would mean less reliance on Middle East oil and unlock more of the crude in the Alberta tar sands, the second-largest proven reserves of oil.

Supporters of the pipeline, including the ruling party of Canada, were quick to rebuff claims in Mr Steyer's ad. They stated that, although China has pumped US$30 billion (S$38 billion) into the Canadian oil industry, Canadian and American companies still own more than 80 per cent of the oil production in Canada.

The Canadian government has also paid for posters in Washington, DC train stations declaring that the country is "America's best energy partner".

The battle, coming at a time when a State Department report declared that the pipeline would mean only a minimal increase in carbon emissions, made clear that the issue remains an intractable one in US domestic politics.

Earlier last week, there appeared to be momentum for a Republican move to tie approval of the project to the latest round of debt ceiling talks. House Speaker John Boehner did not say Keystone would be a condition but told reporters: "Listen, we can build it. There's nothing complex about the Keystone Pipeline. It's time to build it."

Congress needs to raise the ceiling by the end of this month.

The White House and State Department have steered clear of giving a timeline for a decision.

After the ongoing consultation period - which will last 30 days for the public and 90 days for government agencies - the State Department is supposed to make a recommendation to the President.

There is, however, no deadline on when this has to happen. Asked if a decision would come before Mr Obama officially leaves office in 2017, State Department spokesman Jen Psaki said: "Yes."

The pipeline was first proposed in 2008 and the Obama administration has delayed a decision several times.

Environmental groups have since positioned the issue as a marker of Mr Obama's commitment to climate-change legislation.

For all the talk of energy independence and China though, analysts say those are simply distractions.

Dr Charles Ebinger, director of the Energy Security Initiative at the Brookings Institution, said: "We are a nation that supports free trade and there is no security argument that does not favour building the pipeline. The opponents are against fossil fuel use, not just this pipeline."

Yet, given how entrenched the issue is, nobody is expecting a decision any time soon.

Even Dr David Kreutzer, a research fellow in energy economics and climate change at the right-leaning think-tank Heritage Foundation, is pessimistic that approval would come soon.

"It's definitely not going to happen this year. The President cannot alienate his base in an election year."

jeremyau@sph.com.sg

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