EU poised for tar sands vote, stalemate likely

BRUSSELS Wed Feb 22, 2012 4:07pm EST

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BRUSSELS (Reuters) - An EU vote on Thursday on a draft law to label fuel from tar sands as highly polluting is likely to produce a stalemate, EU sources said, marking a draw in a long lobbying tussle between oil giant Canada and environmentalists.

Among those likely to abstain were Britain and the Netherlands, which both have a stake in Royal Dutch Shell, active in oil sands, and the EU's most powerful member Germany.

Spain, which has a large refining sector, and Estonia, whose reserves of shale oil would also be ranked as carbon intensive, were expected to vote against, as was Poland.

"It is very unlikely to get a qualified majority," one source said of the draft law, speaking on condition of anonymity and referring to the EU's complex voting system.

"I heard the Netherlands will probably also abstain. This would mean no qualified majority," another source said.

France, whose firm Total is also involved in tar sands, was likely to abstain unless there was a majority in favour, another source said, adding there was still a chance the Netherlands would vote "yes."

The issue has stirred fierce lobbying from environmentalists on one side and on the other, the oil industry and Canada, home to massive crude reserves, most of which are in the form of very heavy crude, referred to as tar sands or oil sands.

Canada does not directly sell crude to Europe, but is concerned its sales elsewhere might be damaged by a dirty label and it has suggested the EU law could damage trade ties.

Previous meetings on the proposed legislation have stopped short of a vote, but Thursday's debate on the fuel quality directive will include a ballot, according to an agenda seen by Reuters.

Under the EU's majority voting rules its 27 member states are allocated votes depending on the size of their population.

To be adopted, laws need the support of at least 55 percent of EU member states, representing at least 65 percent of the population.

If, as expected, Thursday's vote does not pass the proposed law, discussion will move on from the level of technical committee to debate by ministers from member states.

They would have several months to react to the proposal to include tar sands in a ranking that allows fuel suppliers to identify the most carbon-intensive options.

WIDER CLIMATE GOALS

If finalized, 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.

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.

Adam Brandt, acting assistant professor in the department of Energy Resources Engineering at Stanford University, California, helped the EU come up with its figures using a widely-recognized GHGenius model for calculating emissions over a fuel's life-cycle from wells to wheels.

There are uncertainties, Brandt told Reuters, but available evidence suggested oil sands have around 15-to-20 percent higher greenhouse gas emissions than conventional oil because of the extra energy used in extraction.

The oil industry has cited different research, which finds oil sands are comparable with other heavy crudes in terms of their life-cycle emissions, especially those whose production is accompanied by the flaring of associated gas.

With the backing of the oil industry, Canada has argued tar sands are a crucial source from a politically stable nation, which is not a member of producer group the Organization of the Petroleum Exporting Countries.

The oil industry has also said the proposed law could create an unreasonable administrative burden.

Europia, the European Petroleum Industry Association, in a statement to Reuters on Wednesday argued further that the EU's proposal would fail to lower carbon emissions, impair security of supply, increase the price of feedstock, add to economic fragility and generate tensions with trade partners.

(Editing by Lisa Shumaker)

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