EU Oil Sands Policy Likely To Get Ministers' Attention



BRUSSELS - European Union experts Thursday failed to reach a majority view on a proposal by the European Commission that would discriminate against the use of crude from oil sands, pushing the issue up to ministerial level, the commission said.

They were voting on an proposed update to the so-called Fuel Quality Directive, a piece of EU law that encourages the use of cleaner fuels, as part of a broader EU effort to cut greenhouse gas emissions, by setting a specific target to cut emissions from transport fuels and ranking fuels according to their carbon dioxide emissions.

But the experts--technocrats from national capitals meeting here specifically for the vote--weren't able to reach a large enough majority to back the proposal, effectively pushing the debate up to the ministers' level, the commission said.

"The committee has issued a no-opinion, which means no qualified majority in favor and no qualified majority against" the proposal, said Isaac Valero Ladron, spokesman for EU Climate Commissioner Connie Hedegaard--a strong supporter of the proposal.

"The political discussion will continue," he said, adding that ministers might take a decision by June.

People familiar with the discussion told Dow Jones Newswires Wednesday that key countries like the U.K. and France were skeptical about the proposal. The U.K., the Netherlands and Italy have put forward alternative plans, the people said.

The commission's proposal would penalize the use of oil from sands because it considers that extracting this oil emits more CO2 than extracting conventional oils. This would prompt companies to shift away from oil sands and turn to cleaner fuels to meet the emissions target set in the legislation.

The issue has escalated because it is interfering with negotiation of a free trade agreement between the EU and Canada, which is one of the main global producers of oil from sands. Canada has threatened to take the bloc to the World Trade Organization if it proceeded with its legislation. The U.S. is also following the debate very closely as it uses oil from sands to refine into fuel that it exports to Europe.

Canada's Western province of Alberta is estimated to hold around 170 billion barrels of proven oil reserves, placing it third in the world behind Saudi Arabia and Venezuela. Buried just below Alberta's boreal forest, the oil is a mixture of quartz sands and bitumen--a thick, tarry form of crude. But turning it into oil is an energy-intensive process that emits large amounts of CO2, a greenhouse gas that scientists say contributes to climate change.

Canada objects to putting oil-sands crude into a separate category from other fuels. It says that is unfair and doesn't recognize that some of the sources of EU imports produced higher emissions still, but these hide their performance by being lumped into standard fuel categories.

Canada's exports of oil sands crude to Europe are negligible, but Ottawa fears that any EU legislation singling out the fuel could set a precedent, encouraging oil sands critics in other jurisdictions--particularly in the U.S., the Alberta oil industry's main export market--to push for similar measures.



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