The decision has huge political implications for Obama and Prime Minister Stephen Harper. The planned Keystone XL pipeline is the most prominent of a number of current proposals to give Canada's oil and gas industry better access to export markets, which is crucial to the Harper government's energy policies and the development of the oilsands in Alberta.
But Keystone has run into fierce opposition from environmentalists who say it will open the way for a vast expansion in oilsands production, which the greens say will increase the greenhouse gases contributing to global warming.
In a recent interview, Obama appeared to thrust Ottawa's environmental stance into the spotlight.
Speaking of the final decision he must make on the Keystone proposal, Obama told the New York Times: "I meant what I said; I'm going to evaluate this based on whether or not this is going to significantly contribute to carbon in our atmosphere."
Then Obama added: "And there is no doubt that Canada at the source in those tar sands could potentially be doing more to mitigate carbon release."
The Harper government has been working on environmental regulations for the petroleum industry, including the oilsands, since 2011. An announcement was expected by the end of 2012, but the government has been engaged in lengthy consultations with the industry and the provinces.
In March, then minister Peter Kent told a Commons committee that drafting the rules has taken longer than expected. Still, he said the process was in the final stages. Kent said he hoped to have the regulations out by mid-year. But July 1 passed without action by Environment Canada and now the department has a new minister, Leona Aglukkaq.
Asked where things stand now, departmental spokesperson Danny Kingsberry would only say the government "is continuing to work on new greenhouse gas regulations for the oil and gas sector." But he wouldn't say anything about when the new rules are due.
The regulations would be aimed at reducing the petroleum sector's greenhouse gas emissions as part of Canada's effort by 2020 to trim overall emissions by 17 per cent from 2005 levels. As part of a sector-by-sector approach, the Conservatives have brought in emissions rules for transportation and coal-fired electricity industries. However, Canada is only about halfway to meeting its 2020 target.
Adam Scott, climate and energy program manager for activist group Environmental Defence, said Obama's remarks underscore the lack of action by the Harper government.
"His comment about Canada is fair," Scott told the Star. "The government has been promising to bring in oil and gas regulations for years now and we haven't seen it."
This doesn't help Calgary-based TransCanada Corp., the company proposing the Keystone project, he said.
"From Obama's comments, it's pretty clear he's very serious about taking leadership on climate change and he views Keystone XL as being a problem that way," Scott said.
NDP energy critic Peter Julian said, "I don't think the government is serious at all about bringing in regulations for oil and gas. And it means the government has less and less credibility internationally."
But Kent has said that he is encouraged by the willingness of oil and gas companies to work with Ottawa to combat global warming.
Shawn Howard, a spokesperson for TransCanada, said Obama should keep in mind that Canada is far more accountable on greenhouse gas emissions than other countries that export petroleum to the Americans.
"People are able to track what individual companies can do, governments hold them accountable and that kind of openness and transparency is something you'd be hard-pressed to find in countries like Venezuela or Saudi Arabia," he said.
Aglukkaq was not available for an interview. ILLUS: U.S. President Barack Obama said recently "there is no doubt that Canada at the source in those tar sands could potentially be doing more to mitigate carbon release."