EU's green fuel ranking would cost little-report

Thu Apr 19, 2012 1:29am EDT

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* Industry has warned of undue burden

* Canada has led campaign against the carbon ranking

* Report says much of the work already being done

By Barbara Lewis

HORSENS, Denmark, April 19 (Reuters) - Proposed EU law requiring fuel suppliers to report the carbon intensity of their product, and which also rank oil from tar sands as particularly polluting, would only cost vehicle drivers around one euro cent per oil barrel, a report said on Thursday.

EU member countries are already required to report extensive fuel data, meaning the proposed laws would not require much extra effort, the report by consultancies CE Delft, Carbon Matters and Energy Research Centre of the Netherlands found.

The report, based on an analysis of current EU reporting requirements and interviews with oil industry representatives, counters industry arguments the European Union proposal would pose an undue administrative burden.

Fuel suppliers can report the greenhouse gas intensity of their fuel for 0.8-1.6 euro cents per barrel, the report concluded.

While the short-term price impact of the proposals should be limited, it could impact longer-term investment decisions as the world becomes more dependent on unconventional oil, which is more difficult and energy-intensive to extract.

"It can prevent the greenhouse gas emissions of fossil fuels increasing in the future, due to an increasing share of unconventional oil, and it will make suppliers responsible for these emissions," the report said.

Curbing emission is the goal of environmental campaigners, who are urging the Commission, the EU's executive arm, to press ahead with implementation of its Fuel Quality Directive.

"This independent study shows that most of the reporting needed for this legislation is already being done and the administrative costs would be absolutely negligible," said Nusa Urbancic, programme manager at green transport group T&E.

"It's in the EU's and the industry's interests to see that high carbon oil has no future, if we are serious about reducing transport emissions."

FUEL QUALITY DIRECTIVE

The Fuel Quality Directive, approved by the EU in 2009, sets a target for oil companies to reduce greenhouse gas emissions from transport fuel by 6 percent by 2020 as part of a wider set of green goals.

In October 2011, the European Commission proposed detailed rules for implementing the targets, which include reporting requirements and so-called default values for the carbon emissions of different sources of fossil fuels.

High carbon sources get higher carbon values, prompting Canada, a major producer of tar sands oil, to campaign energetically against the EU plans.

A February meeting of technical experts from the 27 EU member states failed to agree on the new rules after Canada's lobbying, which was backed by EU nations with firms active in oil sands, including Britain and the Netherlands. The Commission is reviewing the next steps.

The European Petroleum Industry Association (EUROPIA) is among those to argue the administrative burden could jeopardise security of supply and possibly lead to the closure of European refineries.

The industry body said that even if the extra cost was just $1 per barrel, some refineries would lose economic value. It proposed using an average greenhouse gas value for all crudes as a better solution.

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