U.S. President Barack Obama has formally rejected an application from TransCanada to build the Keystone XL pipeline, ending seven years of debate over the controversial project.
Obama made the announcement Friday alongside Secretary of State John Kerry and Vice President Joe Biden during a press conference at the White House.
“This morning Secretary Kerry informed me that after extensive public outreach and consultation with other cabinet agencies, the State Department has decided that the Keystone XL Pipeline would not serve the national interests of the United States. I agree with that decision,” Obama said.
WATCH: Canadian Minister of Foreign Affairs Stephane Dion says Canada was disappointed by the U.S.decision to reject the Keystone pipeline.
Justin Trudeau’s new Liberal government had publicly supported Keystone and said he was “disappointed” by the decision.
“We are disappointed by the decision but respect the right of the United States to make the decision,” Trudeau said in a statement following Obama’s address.
“The Canada-U.S. relationship is much bigger than any one project and I look forward to a fresh start with President Obama to strengthen our remarkable ties in a spirit of friendship and co-operation.”
TransCanada, the Calgary-based company behind the pipeline, said it was reviewing its options in the wake of the permit denial.
“TransCanada and its shippers remain absolutely committed to building this important energy infrastructure project,” Russ Girling, TransCanada’s president and CEO, said in a statement.
“We will review our options to potentially file a new application for border-crossing authority to ship our customer’s crude oil, and will now analyze the stated rationale for the denial.”
TransCanada shares were down six per cent on both the NYSE and TSX following the announcement.
The news comes after Washington had earlier this week denied Transcanada’s request to pause the review of the pipeline. The request was seen by many as an attempt to postpone the decision until after the presidential election in 2016.
WATCH: Obama lays out reasons for rejection of Keystone XL pipeline
Newly appointed interim Conservative leader Rona Ambrose also weighed in on the announcement saying her party was “extremely disappointed” with the decision.
“It has been clear for some time that – despite the facts, economic benefits and environmental safeguards – the White House’s decision was a fait accompli,” said Ambrose. “I spoke to Prime Minister Trudeau today and encouraged him to continue advocating for market access for the energy sector.
Meanwhile, Alberta Premier Rachel Notley said she wasn’t surprised by Keystone’s rejection but chastised Obama’s choice of language when describing the province’s “energy exports.”
“The decision today underlines the need to improve our environmental record and enhance our reputation so we can achieve our goal of building Canada’s energy infrastructure, including pipelines, to new markets.”
The controversial $8 billion, 1,900 kilometre pipeline would take oil from Alberta’s oil sands to U.S. refineries and had been in limbo for seven years facing a series of U.S. reviews. The pipeline became a flashpoint for debate about climate change and the environment in both the states and Canada.
Environment groups applauded the announcement as a “leap forward” in the fight against climate change.
“The proposal, pushed largely by the fossil fuel industry, was a recipe for disaster,” said Rhea Suh, president of the Natural Resources Defense Council, in a statement. “In no way was the pipeline in America’s national interest.”
Greenpeace Canada said the decision by Obama should send a message to Trudeau.
“The prime minister needs to follow the president’s lead and recognize that science demands and the public wants action on climate change and that can’t be done while expanding the tar sands,” said Greenpeace spokesperson Mike Hudema.
But it might not be over yet
However, Obama’s rejection of the pipeline application does not necessarily mean the end of Keystone XL.
Backers of the pipeline, including a Republican-controlled Congress, could try to overrule the presidential veto. And the pipeline project could become an election issue during the 2016 presidential race.
Republican presidential contender Marco Rubio immediately weighed in following the announcement.
“When I’m president, Keystone will be approved, and President Obama’s backwards energy policies will come to an end,” Rubio tweeted.
Jeb Bush, another GOP contender, tweeted that the Obama’s rejection of the Keystone “is a self-inflicted attack on the U.S. economy and jobs.”
Energy groups also immediately blasted the decision by Obama, as the analysis by federal agencies that they said proved Keystone could safe and environmentally sound.
“This decision clearly flies in the face of volumes of scientific evidence that shows the Keystone XL pipeline would be safe, enhance environmental standards, and be a more cost-effective alternative to importing oil from overseas,” said Michael Whatley of the Consumer Energy Alliance, which advocates for the energy industry.
The Calgary-based company said earlier in the year it wouldn’t rule out suing the U.S. government under NAFA, as US$2 billion has already been invested in development.
On Thursday, TransCanada announced that another of its pipeline proposals, the Energy East pipeline from Alberta and Saskatchewan to New Brunswick, won’t attempt to put a port on the St. Lawrence River anywhere in Quebec.
*With files from the Associated Press