[BILL McKIBBEN, FOUNDER, 350.org] This pipeline question, this Keystone question, will be the clearest test we've had of Obama's commitment to fighting global warming.

[ASSURAS] That was environmental activist Bill McKibben, one of the organizers of this summer's oil sands protest outside the White House. The protesters say the Keystone XL pipeline project is too dirty to proceed. But the U.S. State Department, which is running the review process, recently said Keystone XL would have no significant environmental impact. Other federal agencies are now weighing in, including the Department of Energy.

Secretary of Energy Steven Chu recently gave "energyNOW!" a wide-ranging interview in which we talked about the pipeline. I asked him if oil sands crude is critical to the nation's energy picture.

[CHU] It's certainly true that having Canada as a supplier for our oil is much more comforting than to have other countries supply our oil. And so I know there's been concerns about this, but, you know, both the technologies that are used to extract tar sands oil, which are improving dramatically, and so I think that could go forward. But I think, in the end, what we need to do is diversify our supply of oil. Right now, our transportation needs come almost exclusively from oil. And so we have a multiple-part strategy. The president said electric vehicles is a big part of this. Energy efficiency. Driving, you know, by 2025, 54 miles to a gallon, instead of, before the administration took office, 25 miles to the gallon. That's going to save Americans $1.7 trillion in gasoline prices. And it will make our cars that we make in the United States competitive worldwide, in a world market where we see oil prices and gasoline prices increasing.

Another part of it is biofuels. There's tremendous research in biofuels, next-generation biofuels. So we can get drop-in substitutes for diesel fuel, for gasoline, and for jet fuel.

Efficiency, biofuels, batteries. Those are the things that we need to diversify our supply of oil. Those are the things that will add to our prosperity.

[ASSURAS] Right, and the president has actually said that by 2025, he wants to cut the nation's oil imports by a third, but has said that the United States should look to Canada as well. Would that mean bringing the oil sands or tar sands oil into this country, even though its opponents call it "dirty oil"?

[CHU] Well, as I said, there are great technological improvements in cleaning up the extraction of that oil. It is a better, more reliable supplier. Canada, we have been good neighbors for a long period of time. But in the end, I will go back to what I said before. We have to diversify our transportation energy from oil. And that's the most important thing we need to do.

If we don't do that, look at what's happening in China, India, and the rest of the developing world. China now has the largest car market in the world. Last year they sold 16.7 million cars. In one year. They passed the United States. They're going to go to 20 million cars in a year. Great wealth is being generated in China. They want to drive cars. The demand for gasoline is going to skyrocket. The same is going to be true of India later. Guess what's going to happen to the oil prices.

So we see these whipsaws. It spikes up, it drops down, spikes up, drops down. This is going to continue. Unless we are less dependent on oil as a country, we will be whipsawed. And that's the most important thing.

[ASSURAS] You did bring up the fact that it is Secretary of State Hillary Clinton who's going to have to approve the pipeline or not, but you, as one of eight members of the cabinet, will be advising her. Do you think it should be built?

[CHU] Well, I think it's one of those decisions where... you're going to have to trade off a reliable supply. You also have to note that the companies that are extracting these tar sands are making great strides in improving the environmental impact of the extraction of this oil and will continue to do so. And they should be encouraged and pressed to do so. But in the end, it's one of those things that, it's not perfect, but it's a trade-off. And meanwhile, I, as Secretary of Energy, are going to focus on batteries for electric vehicles, biofuels, energy efficiency.

[ASSURAS] We'll let you know when the Obama administration makes its decision. And you'll hear more from Secretary Chu next week when we focus on the tough times facing some clean energy companies and the administration's plans to turn things around.