* Climate commissioner hails victory against lobbyists
* EU ministers expected to decide in June
* Canada says will not hesitate to defend its interests
By Barbara Lewis
BRUSSELS, Feb 23 EU nations, under heavy pressure from Canada, failed on Thursday to agree on a proposal to label fuel from tar sands as particularly polluting, giving Ottawa four more months to press its case that the move would unfairly discriminate against one of its most lucrative exports.
A committee of technical experts was unable to deliver a decisive vote on the European executive's proposal to tag oil sands as more carbon-intensive than other crude sources as part of its efforts to curb global warming.
Canada, whose northern Alberta oil sands are the world's third-largest crude deposit, complains the proposal ignores scientific evidence that emissions are comparable to many other oil sources. It has threatened trade actions should the proposal move forward.
The country sells almost no oil in Europe, but worries such a classification under the EU's Fuel Quality Directive (FQD) would sully its reputation as it strives to tap new markets elsewhere. The tag would take into account the extra energy it takes to produce and process the gooey heavy crude.
The indecisive result of the closed-door vote, in which dozens of the experts abstained, prompted officials on both sides of the debate to claim victory.
"We're very pleased. This was certainly a resounding win ... it was a victory for science and good policy," Canadian Natural Resources Minister Joe Oliver told Reuters.
Canada will not let up with its intense lobbying efforts in Europe as EU ministers prepare to vote on the initiative themselves in June, Oliver said.
"If unjustified and discriminatory measures to implement the FQD are ultimately put in place, we're not going to hesitate to defend our interests," he said.
Alberta Premier Alison Redford, whose province contains the 170 billion barrels of crude, said the label would have made it tougher to convince new markets that serious efforts are being made to improve environmental performance.
However, the EU's climate commissioner, Connie Hedegaard, pointed out that tar sands lobbyists had failed in their goal to secure a decisive "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 realize that unconventional fuels of course need to account for their considerably higher emissions through separate values."
NEW MARKETS SOUGHT
For the Conservative government of Canadian Prime Minister Stephen Harper, the stakes could hardly be higher. It has made expanding markets for the Alberta oil sands its Job One.
Besides seeking to shoot down EU labeling, it has been cajoling Washington to approve TransCanada Corp's planned $7 billion Keystone XL pipeline from Alberta to Texas, and is an enthusiastic promoter of new pipelines to the Pacific Coast, which would open up rich Asian markets.
All are controversial as environmental groups mount campaigns against new pipelines to create pinchpoints aimed at slowing development of the huge Alberta resource.
Following the vote, they 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.
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 largest oil sands developers, along with Total of France. They were among nations to abstain on Thursday.
Norman Baker, Britain's under-secretary of state for transport, said his country supported measures to deal with highly polluting fuels, but thought the Commission's proposal needed adjustments.
"We do not want this matter to end in stalemate with no action being taken," Baker said in an email.
'YOUR CHILDREN WILL GIVE YOU THE ANSWER'
"No" voters included Estonia, home to shale oil, which would also be labeled as carbon intensive.
There were 54 votes in favor of the proposal, 128 votes against and 128 abstentions, producing no qualified majority either way under the EU's highly complex system.
Support for tagging the crude as dirty has been led by nations such as Denmark, holder of the rotating EU presidency and a keen advocate of environmental reform.
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.
The directive's overall goal is to reduce carbon intensity of transport fuels by 6 percent by 2020 as part of a wider target cutting 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 oil sands, which require high amounts of energy to convert them into 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, which has been assigned 87.5 grams.