The State Department today issued its final Environmental Impact Statement concerning TransCanada’s proposed Keystone XL pipeline from Alberta to the Gulf Coast. (Available for download here.)

While this is only one step in the review process that will lead to a decision on whether or not State grants a permit — a decision that will be made by Dec. 30th — it bodes well for TransCanada.

After a prolonged environmental review process that included several drafts that came under criticism from the Environmental Protection Agency, State concluded that there will be no major environmental impacts along the route of the pipeline, as long as TransCanada makes some small adjustments to the route.

The State Dept. ruled out requiring that the pipeline be re-routed around a large chunk of Nebraska despite concerns that the pipeline would cross a major acquifer there.

And despite concerns by environmentalists that the pipeline will lead to more development of the oil sands and therefore more carbon emissions into the global atmosphere, the State Dept. concluded that the oil sands will be developed regardless of whether or not the pipeline is built. Therefore, they reasoned, emissions will be unchanged. I asked on a State Dept. conference call whether State was assuming that the proposed pipeline to the West Coast would be approved, and the official said no, but that the assumption was that the oil would be removed one way or another — by truck or barge, for example.

Also in TransCanada’s favour, the State Dept. report noted that technology would help bring down emissions over time in the oil sands. The report also noted that State is not legally required to consider environmental impacts in Canada.

The State Dept. today emphasized in a conference call with reporters that this report is “not a rubber stamp” and that no final decision has been made. But it is hard to see this development as not pointing to eventual approval since the fiercest opposition to the pipeline has been on environmental grounds.

The next step in the process is a 90-day comment period in which government agencies and the public are invited to comment on whether the project is in the “National Interest.” This will include discussion of issues such as energy security and foreign policy, which cut in the project’s favor given turmoil in the Middle East, for example.

With demonstrations and sit-ins in front of the White House this month, environmentalists are trying to put political pressure on the Obama administration to take a stand against oil sands imports on climate change grounds. But leading Republican presidential candidates are casting doubt on the very notion of man-made climate change, giving Obama political room to come down somewhere in the middle.

Environmentalists say their next step will be to take the battle to court.

National Wildlife Federation executive, Jim Lyon said, in a statement,“After two failed rounds of environmental review, this looks like strike three for the State Department.  The document still fails to address the key concerns for landowners and wildlife. It is almost certain to be scrutinized in other venues, including a probable legal challenge. This only escalates the controversy in a process that is far from over.”

The Pembina Institute calls the report “unfathomable.”

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