Canada pleased with EU vote, will defend oil sands

OTTAWA Thu Feb 23, 2012 12:40pm EST

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OTTAWA (Reuters) - Canada hailed the European Union's failure on Thursday to classify tar sands crude as particularly dirty, but Ottawa made it clear it would take trade action if the EU did end up singling out Canadian oil.

A meeting of EU technical experts failed to approve a proposal to label fuel from Alberta's vast tar sands as more polluting than other sources of crude.

Canada had campaigned against the idea, saying it was unjustified and could help discriminate against its oil.

"We're very pleased. This was certainly a resounding win ... it was a victory for science and good policy," Natural Resources Minister Joe Oliver told Reuters in a phone interview.

Oliver said Ottawa would maintain its lobbying efforts against the so-called Fuel Quality Directive (FQD) on the grounds that "I don't think we can take anything for granted". European ministers are expected to make a decision on in June.

"If unjustified and discriminatory measures to implement the FQD are ultimately put in place, we're not going to hesitate to defend our interests," said Oliver.

Canada has stressed in the past that it is ready to take its case to the World Trade Organization if necessary. Under the FQD, fuel classified as being dirty would cost more to import.

"I think some (EU nations) were clearly worried about the impact of this directive on their own costs and on their own companies, who are invested in a variety of countries, including Canada, with a number of them having invested tens of billions of dollars in the oil sands," said Oliver.

Big European firms with stakes in the oil sands include Royal Dutch Shell and Total of France.

The FQD is designed to cut the carbon intensity of transport fuels by 6 percent by 2020 as part of the EU's wider goals to cut carbon emissions by 20 percent by 2020.

"We have never objected to the Fuel Quality Directive's goal of reducing greenhouse gas emissions for transportation fuels used in Europe. We object to any discriminatory treatment that singles out oil sands fuels without sound scientific justification," said Oliver.

(Reporting by David Ljunggren; editing by Rob Wilson)

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