EU delays green barrier to Canada oil sands: draft

BRUSSELS (Reuters) - Europe has yielded to Canadian pressure by delaying possible green trade barriers to Canada’s highly polluting oil sands, but only for one year, a leaked document shows.

Canada has repeatedly warned that draft EU standards to promote greener fuels will harm the market for its oil sands -- tar-like oil that is trapped in sediment and forms the world’s second-largest proven crude reserves after Saudi Arabia.

A recent draft of the European Union’s “fuel quality directive” calculates greenhouse gas emissions from myriad transport fuels, from hydrogen to diesel, but says oil sands will only be evaluated some time before December 31, 2011 -- a year later than plans made as recently as June.

All other fuels will be dealt with by the end of this year, with the aim of guiding industry on which fuels are best suited to the EU’s goal of cutting carbon emissions to one fifth below 1990 levels over the next decade.

The European Union and Canada are in the middle of free trade talks, and the issue of tar sands has become hot.

Relations are already strained after the EU banned imports of seal products last July on animal welfare grounds, a move Canada is challenging at the World Trade Organization.


Environmentalists oppose the industry, saying the extra energy needed to extract oil from the north Alberta sands intensifies the damage they do to the climate, while wastes from extraction harm wildlife and pollute rivers.

But Canada has written to EU environment officials warning any attempt at green regulation could create “barriers to trade.”

Europe seems to have taken the advice.

“The Commission shall propose by December 31, 2011 how to address high greenhouse gas intensity sources,” says the document seen by Reuters on Monday. “This proposal shall, in particular, introduce default values for fossil fuels derived from tar sands and oil shale.”

The Commission had initially proposed that tar sands be ascribed a greenhouse gas value of 107 grams per megajoule of fuel, making it clear to buyers that it had far greater environmental impact than diesel at 87.4 grams or petrol at 85.8 grams.

But the Commission -- which acts as the European Union’s executive -- has since dropped the oils sands value, and now argues the science is too uncertain to act.

Politicians in the European Parliament accuse the Commission of bowing to industry and thereby undermining its own climate objectives. They site 12 scientific studies that put the impact close to 107 grams.

“We are talking about an activity that is expected to quarter of the intact forests of this world,” Greek socialist politician Kriton Arsenis told Philip Owen, one of the Commission’s top climate officials, in a debate last week.

Dutch Green politician Bas Eickhout added: “If you know the number for investment in tar sands in the coming years: it’s 379 billion euros. If the Commission does not send out a signal now that we are putting forward a value on tar sands, we are giving the wrong signal.”

Owen warned against impatience and said the work was underway.

“We are saying that by the end of 2011, which is not so far away, there will be a default value for tar sands,” Owen replied. “This is already a very clear sign to the industry.”

Editing by Sue Thomas