UPDATE 2-Both sides claim victory in tar sands fight
* Climate commissioner hails victory against lobbyists
* EU ministers expected to decide in June
* Canada says will not hesitate to defend its interests
BRUSSELS, Feb 23 (Reuters) - Years of lobbying over a draft EU rule that would label fuel from tar sands as dirtier than that from other oil sources reached an impasse on Thursday, prompting both opponent Canada and environmentalists to declare victory.
A committee of technical experts was unable to deliver a decisive vote either way on the European executive's proposal to tag oil sands as carbon intensive as part of its efforts to curb global warming.
Canada, home to massive oil reserves most of which are in the form of very heavy crude known as tar sands or oil sands, has challenged the EU proposal, saying it is discriminatory and could damage trade ties.
Thursday's vote at a closed-door meeting of technical experts failed to reach a qualified majority under the EU's voting system, which weights voting to reflect the populations of the EU's member states.
Canada's Natural Resources Minister Joe Oliver told Reuters it was clear there was opposition to the EU proposal and said Canada would not hesitate "to defend its interests".
The EU's Climate Commissioner Connie Hedegaard said the tar sands lobbyists had been unable to get a "no vote".
"With all the lobbyism against the Commission proposal, I feared that member states' experts would have rejected the proposal in today's experts committee. I am glad that this was not the case," Hedegaard said in a statement.
"Now our proposal will go to ministers, and I hope governments will realise that unconventional fuels of course need to account for their considerably higher emissions through separate values."
Ministers are expected to take a decision on the issue in June when the risk for the European Commission would be that some of the high number of abstentions at Thursday's meeting would turn into no votes.
Environmental groups welcomed the chance for open debate after a series of closed-door technical meetings.
Greenpeace EU transport policy adviser Franziska Achterberg said the tar sands issue was "finally in the hands of publicly accountable ministers".
"The evidence is clear: tar sands are the world's dirtiest fuels. The decision is even clearer: ministers should stand up to the oil industry and ban them from Europe," she said.
Canada does not directly sell its crude to Europe, although the EU receives some fuel imports that are refined from Canadian oil in the United States.
Its concern is more about the damage to tar sands' image and the impact on future sales that could result from the EU's plan.
Canadian Prime Minister Stephen Harper's Conservative government has made expanding markets for oil sands a top priority and has lobbied not just against the EU law but against environmentalists opposed to pipeline projects in Canada and the United States.
Within the European Union, Canada has found some support in Britain and the Netherlands, both of which have stakes in Royal Dutch Shell, one of the firms active in tar sands, along with Total of France.
They were among those nations to abstain on Thursday.
Norman Baker, Britain's under-secretary of state for transport, said Britain supported measures to deal with highly polluting fuels, but thought the Commission's proposal needed adjusting.
"We do not want this matter to end in stalemate with no action being taken," Baker said in an email.
No-voters included Estonia, home to shale oil, which would also be labelled as carbon intensive.
There were 54 votes in favour of the proposal, 128 votes against and 128 abstentions, which means there were not enough votes to result in a qualified majority either way, under the EU's highly complex system.
Firm backing for the European Commission's proposal, under the Fuel Quality Directive, has been led by nations such as Denmark, holder of the rotating EU presidency and a keen advocate of environmental reform.
The directive's overall goal is to reduce the carbon intensity of transport fuels by 6 percent by 2020 as part of wider goals to cut carbon emissions by 20 percent by 2020.
As a means to that end, it assigns greenhouse gas values to a series of fuels, including those derived from tar sands, which require especially high amounts of energy to convert them into use-able fuel.
Tar sands are assigned a default greenhouse gas value of 107 grams of carbon per megajoule, informing buyers it has a greater climate impact across its life-cycle from wells to wheels than conventional crude with 87.5 grams.
"If people want to use tar sands, it will be more difficult to achieve the target of reducing greenhouse gases by 6 percent," Peter Willumsen, head of section at the Danish energy agency, told Reuters television on arrival for Thursday's meeting at an anonymous Commission building in Brussels.
Slovakia also supported the directive.
"Your children will give you the answer," Matiaz Ferjancic, Slovakia's technical representative at the meeting, said when asked why.
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