A long-awaited State Department environmental assessment found that the Keystone XL pipeline is unlikely to have a “substantial impact” on developing the western Canada tar sands, a conclusion that rejects opponents’ claims that the project would dramatically increase greenhouse gas emissions.

The department released the supplemental draft environmental statement evaluating a new route for the pipeline that would skirt an ecologically sensitive region of Nebraska. While the project made no recommendation on how to proceed, it did not signal any significant environmental obstacles to the project, which is designed to transport crude oil from western Canada to Gulf Coast refineries.

The department is reviewing the proposal in preparation for making a recommendation to President Barack Obama, who has the final say on whether to approve the project.

The finding that the project would not significantly increase emissions that contribute to global warming is a major setback to environmentalists, who had insisted on a “lifecycle” evaluation of the impact on greenhouse gas emissions from extraction until burning.

“With this preliminary analysis, we find in this draft that the approval or denial of any one crude oil transport project, including this proposed project, really remains unlikely to significantly impact the rate of development of the oil sands, or the continued demand for heavy oil in the U.S.,” Kerri-Ann Jones, assistant secretary for oceans and international environmental and scientific affairs, told reporters.

Environmentalists expressed outrage at the finding, which Sierra Club Executive Director Michael Brune described as “deeply flawed.”

“We’re mystified as to how the State Department can acknowledge the negative effects of the Earth’s dirtiest oil on our climate but at the same time claim that the proposed pipeline will ‘not likely result in significant adverse environmental effects,’ ” Brune said, expressing dismay that an agency headed by Secretary of State John Kerry, who was a leading champion of efforts to stem greenhouse gas emissions when he served in the Senate, could produce the report. “Whether this failure was willful or accidental, this report is nothing short of malpractice.”

Bill McKibben, founder of the grass-roots climate change movement 350.org, said the State Department’s analysis was comparable to what he described as its failure to anticipate the Arab Spring.

He called it “really sad” that the concerns of opponents who were committed enough to go to jail in protest, as well as those of leading scientists, were “just blankly dismissed by just a reiteration of the same tired boilerplate.”

Senate Environment and Public Works Committee Chairwoman Barbara Boxer said she would review the impact statement closely.

“I continue to be very concerned about the contribution that the Keystone XL pipeline would make to dangerous climate change,” Boxer said.

Supporters Heartened

But supporters of the project seized on the findings to urge expedited approval of the project.

“It is time to approve the Keystone XL pipeline, which has undergone more than four years of the most exhaustive environmental scrutiny of any pipeline in U.S. history,” said Sen. John Cornyn, R-Texas. “An ‘all of the above’ energy strategy starts with signing off on Keystone and the tens of thousands of American jobs that come with it, which the president could do with the simple stroke of a pen.”

Industry groups also had a positive reaction to the preliminary review.

Chip Yost, the vice president of energy and resources policy at the National Association of Manufacturers, called the study a “step in the right direction toward final approval of this important project.”

“Americans are frustrated with Washington’s inaction, and Keystone XL is a prime example of inexcusable bureaucracy and red tape,” he said. “It’s time for the administration to expeditiously complete its review and approve the pipeline to put Americans back to work.”

Obama had previously rejected an application by pipeline builder TransCanada, citing concerns about the original route through Nebraska’s ecologically sensitive Sand Hills region. But the president invited TransCanada to submit a new application once it had mapped out an alternative route for the pipeline, and the company filed a new application last May rerouting the pipeline around the Sand Hills.

Environmentalists have argued that increasing production of the heavy tar sands oil — which requires far more energy than conventional oil to extract, transport and refine — would dramatically increase carbon pollution. A Congressional Research Service report last May found that building the pipeline could cause an increase in annual greenhouse gas emissions equivalent to putting 588,000 to 4 million more passenger cars on the road.

But the State Department review found that denying the pipeline would not “significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the U.S.” If the project were denied and other pipeline and rail transport projects move forward, the decrease in production of the crude oil from not building Keystone would have little impact on emissions, the study found.

“Fundamental changes to the world crude oil market” would be needed to “significantly impact the rate of production in the oil sands.”

The draft review’s publication in the Federal Register will launch a 45-day comment period, which will include a public meeting in Nebraska, according to the State Department. After the study is finalized, the department will lead an interagency effort to determine whether the project is in the national interest.

The ultimate decision rests with the president.

The State Department says it won’t make a final decision on the pipeline until the second quarter of the year. Originally, it had said it expected a decision within the first quarter of 2013.