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Canada launches new attack against EU's proposed dirty oil rules

Scott Haggett
Wednesday, 13 Nov 2013 | 8:00 AM ET

CALGARY, Nov 13 (Reuters) - Canada on Wednesday renewed its attack on the European Union's plan to classify Canadian tar sands oil as particularly dirty and released a study questioning the data behind the controversial measure.

Canada has the world's third-largest proven reserves of crude, much of which is locked in the tar sands of Alberta. Extracting the oil requires more energy than conventional production, a fact regularly highlighted by environmental campaigners.

The EU is working on a Fuel Quality Directive (FQD) to cut emissions of greenhouse gases from the transport sector. The directive singles out the tar sands, a move Canada fears could set a bad precedent and hit crucial energy exports.

Natural Resources Minister Joe Oliver on Wednesday released a study - commissioned by Canada's right-leaning Conservative government - that claims the EU directive relied on weak data.

"The FQD implementation measures, as currently drafted, are unscientific and discriminatory," said Oliver, who intends to fly to Europe next week to lobby against the directive.

The report by energy consultants ICF International Inc said the FQD ignored the fact that the EU uses oil from Venezuela, Iraq, Nigeria and Russia, which burn and release natural gas during extraction. Oil from these nations is therefore sometimes dirtier than tar sands crude, it added.

"The FQD would discriminate against Canada by discouraging EU refiners and consumers from using Canadian crude oil and products, thereby negatively impacting Canada's energy sector," Oliver said in a statement.

"We hope the European Union will consider this report's findings as a basis for changes to make the Fuel Quality Directive sound, fair and effective."

Should the measure be adopted, it would have little immediate impact on Canadian oil exports, which are now shipped almost exclusively to the United States.

The Conservative government, however, is keen to diversify energy exports and Europe could become a target market if TransCanada Corp builds a planned 1.1 million barrel-per-day pipeline from Alberta to the Atlantic coast.

Last year, amid heavy Canadian lobbying, the EU held an inconclusive vote on the directive and then decided to assess the full impact of the plan. That assessment is due by the end of this year, an EU commission spokesman said.

Oliver toured Paris, Brussels and London in May 2013 to lobby against the FQD, which calls on EU refiners to cut greenhouse gas from transportation fuel by 6 percent by 2020.

The EU's executive commission labeled oil sands crude as having 107 grams carbon dioxide per mega joule - making it clear to buyers that the fuel source had more greenhouse gas impact than average crude oil at 87.5 grams. Canada disputes the figure, contending that much conventional production is more carbon intensive that oil sands bitumen.

TransCanada also wants to construct the Keystone XL pipeline to take tar sands crude from Alberta to the United States.

Green activists are pressuring U.S. President Barack Obama to veto the project on the grounds it would accelerate the pace of climate change by boosting oil sands production. Obama is due to announce his decision next year.