CANADA FIGHTS EUROPEAN UNION DIRECTIVE LABELING OIL SANDS AS DIRTIEST CRUDE

10/24/2011

Canada's government and energy industry have launched an effort to reverse proposed European Union (EU) fuel quality standards that would rank Canadian oil sands as one of the earth's most carbon-intensive crude sources. The proposed Fuel Quality Directive would give oil sands a default greenhouse gas value of 107 grams of carbon per megajoule, while conventional fuel is given a value of 87.5 grams. Canada, which has been touting oil sands as a secure and stable energy supply, believes that the directive is discriminatory. The government of Alberta voiced "grave concerns" over the proposal, saying in a letter that it "believes that the Fuel Quality Directive implementing measure as it currently stands would be incompatible with the EU’s international trade obligations." The letter argues that there is no scientific reason to single out oil sands from other crude sources. Canadian Natural Resources Minister Joe Oliver said that he was "cautiously optimistic" that he could win European support against the proposal, as European companies that have heavily invested in Alberta's oil sands stand to be disadvantaged. However, EU legal advisers have said that the proposals can probably be defended should Ottawa challenge the ranking with the World Trade Organization (WTO). A letter sent by EU officials said the proposals were science-based and non-discriminatory, and that if the WTO disagreed it would claim a derogation under rules designed to conserve natural resources. The EU Commission has argued that the entire life-cycle of the fuel must be taken into account and that the measures would label oil sands from Venezuela carbon intensive as well. For the full story, see http://www.vancouversun.com/life/environment/Canada+fighting+plans+label+oilsands+world+dirtiest+crude+source/5575302/story.html. For Alberta's letter, see http://business.financialpost.com/2011/10/21/alberta-tells-eu-oil-sands-ranking-is-threat-to-trade/.For Joe Oliver's plans, see http://online.wsj.com/article/BT-CO-20111021-708713.html. For the story on the letter from legal advisers, see http://ca.reuters.com/article/domesticNews/idCATRE79K3E420111021.