Canadian energy policy could be influenced by Obama's EPA nominee

WASHINGTON - As Canada continues to herald its collaboration with the U.S. on climate and energy, President Barack Obama has announced his picks to helm the powerful Environmental Protection Agency and the Energy Department — two new faces who will now have indirect sway over Canadian policy.

Obama tapped his so-called green quarterback, Gina McCarthy, to become head of the EPA on Monday. The pick represents a promotion for McCarthy, a top agency official who's been a fierce champion for tougher carbon emissions standards for years.

Ernest Moniz, a nuclear physicist at the Massachusetts Institute of Technology, is the president's pick as energy secretary. Obama praised him as a "brilliant scientist" who knows the U.S. can produce more energy while protecting the climate and the environment.

"So these two ... they're going to be making sure that we're investing in American energy, that we're doing everything that we can to combat the threat of climate change, that we're going to be creating jobs and economic opportunity," the president said in the East Room of the White House.

"They are going to be a great team."

He urged the U.S. Senate to confirm both picks as soon as possible.

McCarthy's nomination, in particular, has delighted environmentalists, who are still reeling from the U.S. State Department's near-blessing of TransCanada's Keystone XL pipeline last week in its latest environmental assessment of the project.

The vast majority of Obama’s second-term agenda on climate change and energy will be achieved through McCartney's agency, not Congress.

The EPA is also one of several federal agencies advising the Obama administration on the $7.6-billion pipeline, a project that would carry millions of barrels of bitumen a week from Alberta’s carbon-intensive oilsands to the U.S. Gulf Coast.

The agency was critical of the State Department's previous ecological analysis of the project, viewed by the environmental movement as a symbol of "dirty oil."

"A lot of voices still have to weigh in on the pipeline, and the EPA has a role to play in that," Gene Karpinski, president of the League of Conservation Voters, said in a conference call of environmentalists on Monday who uniformly expressed elation over McCarthy's nomination.

"We expect the EPA's voice to be elevated on Keystone moving forward."

Some of Keystone XL's most bitter foes in the U.S. capital also praised McCarthy's nomination.

"The president could not have picked a more qualified person to lead EPA at this critical time," California Sen. Barbara Boxer said in a statement.

Andrew Weaver, a Canadian climate change expert, was equally pleased by McCarthy's nomination given the Canadian government is facing mounting pressure, even from the oil industry, to introduce federal climate change regulations.

"It's fantastic because Canada has shown no leadership at all on this portfolio — we've been deal-breakers, not deal-makers," said Weaver, a University of Victoria climate modeller who's been a lead author on two reports from the United Nations Intergovernmental Panel on Climate Change.

"And now we're starting to see real leadership, at last, from the U.S. and the Obama administration on climate change — including this nomination — and so the more Obama does, the more that Canada has to do. He's going to drag Canada kicking and screaming into dealing with climate change."

McCarthy, 58, spent much of Obama's first term writing and rolling out federal power-plant emissions regulations. Her determination to reduce greenhouse gas emissions angered Republican lawmakers from coal-rich states, suggesting her appointment won't be a cakewalk.

Now McCarthy is expected to oversee the drafting and implementation of similar rules for existing power plants.

There have been growing concerns among Keystone proponents in the U.S. capital that Obama may insist on something in return for approving the pipeline, including a carbon levy imposed at the border. That could significantly increase the costs of importing oilsands bitumen into the United States.

Some observers wondered, however, if tougher emissions standards for existing power plants could provide the Obama administration with some cover if it decides to approve Keystone.

Chris Damas, a Canadian energy sector investment analyst for BCMI, pointed out that the new rules could be a "show to offset a KXL thumb's up."

Cracking down on coal plant emissions stateside, however, also spells trouble for Canada if it's serious about its oft-stated intentions to fall in step with American federal regulations, said Weaver, who pointed out that coal plants are still up and running in Alberta, Saskatchewan and Nova Scotia.

"We're even still seeing new coal plants being proposed in those provinces," he said. "To say that we're a leader in coal is absolutely not true."

Last week, Environment Minister Peter Kent said Canada will require heavy-duty vehicles to meet stricter fuel standards beginning with next year’s models, taking pains to stress his government's co-operation with the Obama administration.

“Our government continues to align our measures with the United States,” Kent said, adding the regulations were yet another example of the success Canada is having “working collaboratively with its partners in the United States” to reduce greenhouse gas emissions.

Kent's office didn't reply to a request for a comment on Monday on McCarthy's nomination.