BRUSSELS--Canada scored a victory Tuesday when the European
Union ditched plans to label oil sands as dirtier than other forms
of crude, removing a major potential obstacle to exporting the
controversial fuel to Europe.
The EU had originally planned to put in place legislation to
penalize fuels made from the oil sands of Alberta, which are viewed
as being far more polluting to produce than other crude oils used
to produce fuel for transport.
The watering down of the proposals, the result of unrelenting
lobbying by Canada, means that oil suppliers will now be able to
put oil from tar sands in the same category as conventional oil,
whereas it would previously have been designated as 25% more
carbon-intensive. Refiners will now be freer to import greater
volumes of oil sands.
The announcement by the European Commission coincided with the
arrival of 700,000 barrels of the oil sands on the Italian island
of Sardinia, the second such cargo to be shipped to Europe.
Canada has only just begun exporting crude to Europe, with a
first cargo shipped to Spain in May, but it views Europe as a major
potential market.
It is planning major pipelines, such as the Energy East Pipeline
running from western to eastern Canada, and Keystone XL, which
would send oil sands to refineries on the U.S. Gulf Coast.
Canada's government has argued that oil sands would help the EU
achieve its goal of diversifying its energy sources at a time when
the continent looking to rely less on Russia for its oil and gas
supplies.
Canadian authorities couldn't be immediately be reached for
comment.
Transport and Environment, a pressure group, pointed to research
showing that the legislation could result in oil sands making up to
6.7% of Europe's transport fuel by 2020, up from 0.01% today.
"That is the equivalent of adding six million cars to Europe's
roads by 2020," said Laura Buffet from T&E. "On the contrary,
the initial idea of the target was to decrease the carbon intensity
of EU transport fuels."
The Fuel Quality Directive was conceived five years ago to
promote cleaner transport fuels by obliging fuel suppliers in
Europe to reduce the greenhouse- gas intensity of transport fuel by
6% by 2020 compared with 2010.
The law, which must still get approval from EU member states and
the European Parliament, is part of the EU's broader strategy to
fight global warming and cut carbon emissions by 20% by 2020,
compared with 1990 levels.
One commission official described the pressure from Canada to
overturn the commission's initial proposals as "immense."
Canadian officials organized around 110 meetings between
September 2009 and July 2011 alone to ensure that oil sands
wouldn't be singled out in the proposals as being more responsible
for carbon dioxide emissions than other fuels, according to Friends
of the Earth Europe, a green group.
The issue also formed part of long-running negotiations of the
Comprehensive Economic and Trade Agreement, the trade agreement
signed between Canada and the EU last month, EU officials said.
"It is no secret that our initial proposal couldn't go through
due to resistance faced in some member states," Connie Hedegaard,
the EU's Climate Action Commissioner said. The U.K. and the
Netherlands were among a handful of EU countries sought to overturn
the initial draft law. BP PLC and Royal Dutch Shell both have major
oil sands projects in Alberta.
FuelsEurope, an organization representing Europe's refiners,
welcomed the "simple and effective methodology", which it said
would "limit the impacts on the competitiveness of the European
refining industry".
Under the new methodology, companies supplying fuels to refiners
in Europe would be able to use a default average value for the
carbon intensity of all petrol or diesel when reporting on their
fuels to member states. Previously, oil sands would have had a
value of 107, far higher than the value of 93.2 for conventional
crude.
Based on a new, overall average value of 93.3, fuel suppliers
have to meet their 6% emissions reductions.
In addition, suppliers will also have to separately report on
the origin of their feedstocks to the commission, which will EU
officials to monitor trends such as the increase in oil sands
imports.
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