Europe Wants No Part of Canada's Oil Sands -- Or Does It?

In what many will view as another instance of the regulation-happy European Union getting smacked-down, the European Parliament’s Environment Committee has delayed until December 2011 a ruling on how to calculate greenhouse gas emissions for fuel produced from Canada’s oil sands. The Committee’s job is to provide a guide for European industry to which fuels will be most helpful in meeting the EU’s goal of cutting carbon emissions in the next decade by 20% from 1990 levels.

European environmentalists, who have substantially more clout in Europe than their US counterparts do in the US, want to ban imports of oil derived the Canadian oil sands. The argument is that the huge amounts of energy used to produce oil from the deposits magnifies the damage by greenhouse gas emissions, and that the waste pollutes local rivers and harms wildlife.

The Canadians are challenging the EU ruling in the World Trade Organization. They are still touchy about the ban on seal products/

Canada has also sent a letter to EU officials warning them that any attempt to regulate the flow of oil sands product to Europe could create “barriers to trade,” according to Reuters.  That letter apparently cause the EU to defer the decision on oil sands products until next year, while continuing with its plans to rate all other fuels.

The Committee is responsible for devising a “fuel quality directive” that assigns a numerical score to each fuel type based on its carbon emissions. It seems that Canada’s oil sands scores are pushed substantially higher because of the amount of greenhouse gas emitted in getting the mined product out of the ground and processed into synthetic crude oil.

The initial proposed numerical value for oil sands-derived gasoline was 107, considerably higher than diesel fuel at 87.4 and gasoline at 85.8. That’s what set the Canadians off.

So the EU has backed down from releasing an oil sands value for this year. The EU does not want to start a trade war with Canada if it can be avoided.

Still, it’s hard to see how the delay is going to change the chemistry, but stranger things have happened. This is politics after all.

Paul Ausick