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Canada must ‘respect’ decision to cancel Keystone XL, minister says

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Canada’s energy minister said the country must “respect” Joe Biden’s decision to scrap the controversial Keystone XL pipeline and dismissed calls from provincial politicians to pursue punitive measures against the US.

“This was a significant campaign promise by candidate Biden. It is one that he has kept as President Biden,” said Seamus O’Regan, the natural resources minister in the federal Liberal government. “We have to respect that.”

His comments to the Financial Times suggest the federal government will make no further efforts to change Mr Biden’s mind. “We made our case in every way we could,” he said.

But there is “every indication that he means business on this”, he added, referring to the new president’s decision.

Mr Biden made the cancellation of TC Energy’s permit to build the US leg of Keystone XL one of his first acts as president.

The $8bn project would have involved construction of a pipeline to carry bitumen from the oil sands of northern Alberta to refineries in Texas.

Environmentalists cheered the move as a significant first step in Mr Biden’s plan to tackle the climate crisis. Canada’s ultra heavy oil deposits are more carbon intensive than most other forms of crude, and ecologists criticise the northern Alberta developments’ large ecological footprints.

But the move caused shock in Canada — and has opened another bitter schism between Ottawa and politicians in the western province of Alberta, who believe the federal government has been insufficiently supportive.

Justin Trudeau, Canada’s prime minister, said in a statement shortly after the cancellation that he was “disappointed but acknowledge(d)” the decision.

Politicians in Alberta reacted angrily to the termination of the project, which was proposed more than a decade ago and in which the province had taken a $1bn stake to push its progress.

On Thursday, Jason Kenney, the province’s premier, sent a letter to Mr Trudeau criticising the “lack of federal response” to the permit cancellation and calling for “a path to reconsideration for Keystone XL”.

“I strongly urge you to ensure that there are proportionate economic consequences to these unfair US actions,” Mr Kenney said.

He also called on Mr Trudeau to seek compensation for money TC Energy and the government of Alberta had spent on the project.

But Mr O’Regan seemed to rule out any such measures, telling the FT it was in Canada’s interests to look ahead to other areas of the co-operation with the US now and not dwell on the Keystone XL saga.

“The windshield is bigger than the rear-view mirror,” he said. “Pretty basic market dynamics is that you listen to the customer . . . and the customer has changed in terms of what it is demanding and wanting from the product.”

Alberta has waged a public relations war in the past two decades, promoting projects that have been vilified internationally by environmental campaigners and from which international investors and financiers have fled.

The cancellation marks an abrupt — but expected — shift from Mr Biden, who made climate change central to his campaign and had explicitly promised to scrap the project. Before he was elected in 2016, his predecessor, Donald Trump, promised to ensure Keystone XL’s construction and issued a permit allowing it early in 2017. Court battles prevented progress.

The project would have carried 830,000 barrels a day of bitumen from Hardisty, a central Alberta oil-gathering point, to the US Gulf Coast.

Supporters of Keystone XL have maintained that further growth from Canada’s oil sands — the single biggest source of foreign oil in the US — is threatened by lack of pipeline export infrastructure.

But a pipeline project to the West Coast of Canada bought by the country’s federal government in 2018 would increase export capacity, say analysts. Exports from Canada to the US were close to 4m b/d last week, near a record high.

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