UPDATE 2-EU vote on tar sands oil delayed until 2013

Fri Apr 20, 2012 9:34am EDT

* EU source says Commission committed to getting law passed

* Canada, with backing from some EU states, lobbied hard

By Barbara Lewis

HORSENS, Denmark, April 20 (Reuters) - The European Commission has decided to carry out a full study into the impact of a proposed fuel quality law on business and markets, an EU official said, delaying until next year any ruling on oil from tar sands after intense lobbying by Canada.

Ministers had been expected to vote on the law in June, in line with EU efforts to reduce greenhouse gas emissions.

But the official, who spoke on condition of anonymity, said EU member states would not be asked to decide before early 2013 on the scheme, part of the EU's Fuel Quality Directive, which would rank tar sands oil as more polluting than other fuels.

Canada, which has opposed the ranking proposal, sits on the world's third-largest crude reserves after Venezuela and Saudi Arabia. The vast majority of Canada's oil is in the form of unconventional crude including tar sands.

A Commission impact assessment will analyse the consequences on stakeholders such as major oil firms Royal Dutch Shell , Total and BP and refineries.

"The proposal will not be submitted to the (European) Council before early 2013," the EU source said, referring to the body that brings together EU member governments.

"We have decided to have an impact assessment before submitting the proposal to the Council," said the source.

POLLUTING VALUES FOR FUELS

EU member states approved the Fuel Quality Directive in 2009, with the aim of cutting greenhouse gases from transport fuel production by 6 percent by 2020, as part of a wider set of green goals.

But intensive lobbying meant it was not until October last year that the Commission proposed detailed rules for implementing the law.

They include reporting requirements and carbon emission "default values" to rank different kinds of fuels by their greenhouse gas output over their wells-to-wheels life-cycle.

Tar sands have been ascribed a value of 107 grams per megajoule of fuel, making it clear to buyers that it had more impact than average crude oil at 87.5 grams.

Other unconventional sources, such as oil shale found in EU member Estonia, are also given a relatively high value.

A series of technical meetings culminated in February in failure to agree on the plan.

Both Canada and the European Commission declared victory, with EU Climate Commissioner Connie Hedegaard saying at the time that she had feared outright defeat as a result of lobbying.

The EU source said on Friday that the decision to carry out an impact assessment was intended to win over waverers.

"We did not have a qualified majority against or in favour. We want to gain the support of those who are in doubt," the source said.

"The idea is to address a number of concerns raised by stakeholders and member states," the source added.

"I can't pre-empt the result, but we're confident it will be favourable. We're totally committed to getting this proposal through."

Impact assessments, carried out by independent analysts, are a standard procedure in EU law-making, but the Commission had thought it unnecessary in ranking fuels, because it was only the means of implementing a directive that had already been agreed.

The lobbying, however, was so extensive, the EU source said, there was a feeling in the Commission that the measure would be a way to muster support.

Canada has argued the draft law is unfair to Canadian oil and that other fuel sources are also carbon intensive. The oil industry as a whole has said it would be an excessive administrative burden, potentially extremely negative for already struggling EU refineries, for instance.

An independent report carried out by a group of consultancies and published early this week found the cost would be negligible, although over time the law could discourage investment in the most carbon-intensive sources of crude, which environmental campaigners say is entirely appropriate.

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Comments (1)
UrbaneCowboy wrote:
One can tell the political bias in an article by the choice of words. “Tar sands” is a pejorative used by anti-fossil fuel zealots to smear oil sands production. Tar is a man made substance and thus an improper moniker for oil sands.

Apr 21, 2012 11:56am EDT  --  Report as abuse
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