California backs EU plan for "dirty fuel" label

Tue Dec 6, 2011 6:01pm EST

Related Topics

* California backs EU "dirty fuel" label plan

* Canada says science behind oil sands criticism is wrong

* EU to debate scheme in January

By Barbara Lewis

DURBAN, South Africa, Dec 7 (Reuters) - EU plans to slap a "dirty" label on fuels derived from Canada's huge oil sands reserves have received a boost from California, whose pioneering labeling scheme seeks to put consumers in the driving seat.

Canada sees huge export potential for its reserves of oil sand, which are among the world's largest, and has bitterly opposed EU plans it regards as a threat to future markets.

Extracting oil from a mix of sand and clay is energy and water intensive and critics such as Nobel laureate Al Gore argue that using oil sand-derived fuel effectively converts an economic car into a gas-guzzler.

"Over its life cycle, fuel made from tar sands emits much more CO2 than either coal or oil. A Toyota Prius running on gasoline made from tar sands has the carbon footprint of a Hummer," he said in his book "Our Choice".

Canada, together with the oil industry, has lobbied furiously against a draft EU law it says is unfair, not based on science and imposes an unreasonable administrative burden.

But California has already introduced a pioneering scheme to allow consumers to choose their fuel based on the lowest carbon emissions over the wells-to-wheels life cycle.

And it says the scheme works.

"The Low Carbon Fuel Standard merely recognizes that greenhouse gas emissions from crude oil can significantly vary and accounts for it accordingly," Mary Nichols, chairman of the Californian regulator the Air Resource Board, wrote in a letter to EU Climate Commissioner Connie Hedegaard.

"(It) does not discriminate against any source of crude oil, nor does it prohibit any crude oil from being imported into or refined in California."

The letter also states oil firms track and report their crude oil information "as a normal course of business" for internal reasons and government-reporting requirements, meaning little extra red tape was involved.

The European Commission approved on Oct. 4 a proposal to include tar sands in a ranking designed to enable fuel suppliers to identify the most carbon-intensive options.

Tar sands are assigned a default greenhouse gas value of 107 grams of carbon per megajoule, informing buyers it has more climate impact than conventional crude with 87.5 grams, EU sources said.

If finalised, the ranking would complete legislation introduced in 2008, when the EU agreed to reduce the carbon intensity of its transport fuels by 6 percent by 2020, as part of wider goals to cut carbon emissions by 20 percent by 2020.

A decision on whether to include tar sands was delayed after objections from Canada.

The issue has been raised in the context of talks on a free trade agreement between Canada and the European Union, with Canada threatening action at the World Trade Organization (WTO).

Commission legal advisers and other lawyers doubt Canada would win such a case.

Britain, whose oil companies BP and Royal Dutch Shell are active in Canada, has lobbied on Canada's behalf in Europe and attracted support from eastern European nations, including Poland, holder of the EU's rotating presidency, and Estonia, whose shale oil would also be labelled as highly polluting.

A meeting in Brussels last Friday continued technical debate on the issue, an EU source said, adding the subject would be aired again in January.

Jeff Sundquist, Managing Director of the Province of Alberta's UK office said Alberta was collaborating with California on their low carbon fuel standard to find an effective solution.

"We would happily do likewise with the European Union," he said. "Oil sands are absolutely on the continuum of lifecycle emissions with other crudes. We're higher than some, we're lower than others, so to single out one doesn't make sense."

Alberta is home to the bulk of Canada's oil sands deposits.

Chris Davies, Liberal Democrat environment spokesman in the European Parliament, accused Canada of seeking to protect "narrow financial interests".

"The oil industry has claimed that it would be costly and difficult to track where oil comes from," he said further.

"We can trace eggs back to the farm from which they came, but one of the richest and most technologically-advances industries cannot keep track of the origin of its products? It is not a convincing argument."

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